Legal Case Summary

Will your argument this morning in case 171657, mission product holdings versus temperature knowledge LLC? Ms. Spinelli? Ms. Chief Justice, and may it please the Court. Section 365 of the Bankruptcy Code lets the trustee decide whether the estate will become a party to an executory contract of the debtor. If so, the trustee assumes the contract and the estate steps into the debtor's shoes. If not, the trustee rejects the contract. The statute's plain text tells us what that means. Rejection constitutes a breach of such contract immediately before the date of the filing of the petition. The debtor will not fulfill any remaining unperformed obligations under the contract, and the counterparty will have a pre-petition claim against the debtor for any resulting damages. But that's all rejection is. The estate's decision not to take on the debtor's future performance obligations, which are therefore breached. The overwhelming consensus of courts and scholars is that rejection can't give the estate any greater rights with respect to the rejected contract than the debtor would have outside bankruptcy. And as respondent doesn't contest, outside bankruptcy, a license or, could not use its own breach of contract as a basis to terminate the licensees rights under the agreement? You just said, and I think it's correct, that the debtor would be, rejection means that the debtor has no obligation to perform future duties under the contract. But if the debtor in this case as the owner of the trademark in question did not continue to perform quality control activities in relationship to the mark, would that not imperil the future of the validity of the mark? So how can the debtor not continue to perform duties under the contract? So the quality control obligation is an obligation that's imposed by trademark law, not solely by the contract, and in many cases not at all by the contract. It is quite true that if- it's a trademark law, but to the extent that there's a rejection of the contract, the property owner is electing to say, as he, as it is entitled to say under the law, I reject that obligation vis-a-vis you. Hence, you can't continue to use my mark because I can't assure I'm not capable. That's why you reject a contract because it's not beneficial to the company. I reject that obligation. Hence, I reject you're being able to use it. With respect, just as so to my or that is not how it works. Why? When? Why? How, why isn't that exactly how it works? Meaning, once I lend you something and say it's conditioned of my approval of what you're doing, and I withdraw that approval, haven't I withdrawn? No. So, the license- so, let's imagine that the agreement itself imposed an obligation on the license-or to monitor the quality of the licensee's goods. If that is so, the license-or is free, the estate can choose not to assume that going forward obligation, but rejection only relates to contractual obligations. One of the trademark Amikai briefs said, if you're the licensee, you don't have the right to produce an item. If this license was one in which I gave you the license to sell my goods, that they, and I refuse to sell you the goods, they can't go out and make the goods. They can't go out and put the trademark on something else because they don't have the right to do that. Sotomayor, you're not going to do that. Sotomayor, you're not going to do that

. I don't disagree, but the point is that you've been, that by rejecting the contract, I've basically said, you can't use my goods. You're entitled to sue me. You can't use my mark, you're entitled to sue me. Just to sue me, or let me explain why I think that's not correct. First of all, outside bankruptcy, as respondent has conceded, the license-or's breach would not let it take away the licensees right to use the mark. The license-or could say, I'm breaching all day long, but the licensee could continue to use the mark. When you say that, Ms. Spinelli, what law do you look to to find that? To find that principle. I mean, you say you look to outside bankruptcy, locked. Are you referring to state law? Is it a kind of common law? Trade marks are governed by state law, by federal and by federal statute, the Lanermact and the case law that's developed under the Lanermact. But this is actually a much simpler principle. It's simply that there is nothing that the license-or could do outside bankruptcy by breaching to stop the licensee from using the mark. The only thing that it could do is bring a suit to enjoy in the licensee from using the mark. And in that case, the license would be a complete defense. So outside bankruptcy, it can't be done. The other point is. I do have a question about 365N. Of course. Which is 365N is not the default rule with respect to intellectual property. It gives more and less rights to the lessores and less seas than the common law would permit. That's correct. That seems counterintuitive to me or counterlogical given the explanation that the Congress gave, that it understood that the trademark owners would get more rights than N provides to other licenseors in the intellectual property field. It mentioned the reason why the courts up to that time who had recognized rejection as termination that trademark owners were different because they had quality control problems. So I read that, and I think to myself, why would you think of giving trademark owners more rights or less rights than people under N? Let me explain just a so-to-my-or. It is certainly true that Congress made an advertent decision to leave trademarks out of 365N. But the legislative history makes it very clear that in enacting 365N, Congress did so because it thought the rule of Lubrizal, which is that rejection deprives the counter party of rights already conveyed under the agreement, was wrong, and that principle can't logically be confined. But it didn't think it was wrong completely because it did a sort of hybrid giving more and less at the same time

. But it did completely reputiate the Lubrizal rule. It said it kept some of it, and it rejected others because of the situational difference. With respect to so-to-my-or, what it did is it said that the licensee can retain its rights under the contract, and that's precisely the issue in Lubrizal. It did, in addition, go on to set out a specific federal regime governing subsidiary issues that arise with respect to the relationship between the licensee and the licensee or following rejection, and you're correct that that regime differs in some respects from the state law that would otherwise apply. But there is no question whatsoever that Congress repudiated the basic rule of Lubrizal, saying that it was never intended that in addition to relieving itself of the debtors affirmative performance obligations, Congress never thought that rejection would enable the estate to take back rights already conveyed to the licensee. Could one say it didn't take any position on Lubrizal one way or another in the trademark context? It did quite specifically in the patent context, but it didn't either approve or disapprove. One could say that, Justice Ginsburg. I believe the reason that Congress didn't include trademarks in 365N is because it, first of all, it was dealing with an emergency with respect to patent licenses. The situation was described as urgent, that was what Lubrizal was about. Congress recognized that trademarks do have some differences from patents, and it thought that further study was required in order to shape the federal rules that would govern the parties' relationship. But the difference, it said specifically, didn't it what the difference that thought there was, right, which was this quality control obligation that Justice Salito started us off with? And I guess just to take us back there, why is it that that obligation does not make trade marks different under, you say we look to State law? I mean, are you saying that there's uniform State law that says that the quality control obligation sort of makes no difference with respect to this issue that the entire contract is not unwound? There is, I don't believe anyone would say that the entire contract can be unwound by the unilateral act of the licenseor. That's just basic contract law. Right. I mean, the question is whether the quality control obligation makes trademarks different from normal contract law. No. That's the question. And the answer is no. There is no support for that at all. What happens when the licenseor abdicates its quality control obligations, which again stem from trademark law, not from the contract, is that the licenseor risks abandonment of the mark. So the licenseor may lose its rights in the mark. If that happens, then the mark is up for grabs. The licensee can continue to use it, so can third parties, whoever can establish rights in it through use will be the new owner. But it absolutely does not change basic contract law principles, including that the breaching party cannot terminate the contract because it breaches. The opposite is true. I'm sorry, just a little. What would happen in this situation? So the debtor is the lessor of residential property. It rejects the lease

. And you would say that, however, the less he could continue to live in the residential property, and the lessor would be relieved of any further obligations under the contract. Correct. But not statutory obligations. Correct. So if there was a statute that said that any lessor of residential property has to provide heat, they would continue to do that. Precisely. And the reason that's so is that the estate is the owner of the underlying property. So if it's an apartment building, the estate now owns the apartment building. The estate is not given any kind of exemption from generally applicable law relating to property ownership simply because it's in bankruptcy or because a contract relating to that asset has been rejected. This is the kind of thing that Trustee deals with every day. The Trustee is obligated with respect to all of the estate's assets to comply with generally applicable law. And it's also required to decide whether a particular asset is valuable enough to be worth investing estate funds in. So with regard to the quality control obligation, the Trustee will have to make a decision. Is this mark valuable to the estate? And if so, is it valuable enough to warrant making the really pretty minimal investment that's necessary to continue monitoring quality? I mean, just thinking, I'm sorry. No, please just as you. You know, just thinking about that example, you gave the analogy of the lessor of real property. There is in many cities, background law, that says once the landlord stops maintaining the property, the city insists that the tenant leave because the property isn't safe anymore. And I guess one question is whether there might be or is a similar background rule with respect to what happens to a trademark where the obligation for quality control is not being maintained. Is that a silly analogy? It's not a silly analogy at all, but there is not analogous law. You know, again, the license or is breached doesn't entitle it to terminate the licensee's rights. Because if we were to licensee have any rights with respect to quality control if the license or is not fulfilling its duty? So the licensee frequently takes upon itself the great burden of quality control. I mean, quality control is obviously in the licensee's interest as much as the license or is because the licensee wants to maintain the validity of the mark just as much as the licensee or and the licensee is selling goods and it doesn't want them to get a reputation for poor quality. Can I ask you to address the mootness question in this case? So as I understand it, let's put the exclusive distribution rights off the table. The court below said they're forfeited, assume for the moment that I'm not going to unforfeit them. So we just have the license arrangement. And as I understand it, your client wasn't under any orders not to use the license of the trademark. And so what theory are you injured and what damages might you have? The mission was injured because it was wrongly prevented from using the trademark on its goods post rejection

. The bank has stopped. It had said two years before leading up to the agreement that it wasn't going to order any goods. Well, what happened just to so-to-my-ours that prior to bankruptcy, technology attempted to terminate the contract, mission placed a purchase order, technology said we're not going to fill that order. So it's true that immediately before the bankruptcy, mission hadn't been placing purchase orders because technology was refusing to fill them. And then once the rejection order was within place. Were you producing your own goods using their trademark or were you just buying from them? No. Oh, I'm sorry. No. At that point we were purchasing the goods from technology, which was a requirement under the contract. So they no longer had to supply you with goods. So why are we here? Meaning that's a brief. They have an obligation and you're open to damages. But without you producing the goods, I thought that brief from the meek I said that you're relieved from supplying goods. The lesser is relief from supplying. But just to so-to-my-our, we had a right under the agreement if technology failed to provide us with goods to source those goods elsewhere. May I reserve the remainder of my time? Yes. Thank you. Mr. Trip. Excuse me. Mr. Chief Justice, may I please the Court? If I could just pick up on a couple of the questions about whether trademarks are different and then say if you were to say about our rule, why respondents are wrong, and what the United States interest is here. So I think an important point about trademarks with the quality can be told. I'm not going to interrupt you again. But if you could add to that excellent list of things to do, discussing mootness. Thank you. I'll start with the moot dance

. The case is not moot. This is at bottom acclaimed for money damages and it's still up in the air whether Petitioner is going to get a judgment in its favor. Respondent has raised a number of arguments on remand. Petitioner would lose even if you rule in their favor here. But Petitioner disputes all of that and no court has resolved those remaining disputes. Well, if we put a sub-exclusive distribution agreement, and I really don't want to belabor this, but I'd like you to focus specifically on the trademark license. If there was no order prohibiting Petitioner from using the trademark at any point, then where are the damages? This part of respondents' arguments, I'm not sure I understand because it seems to prove way too much, because if it's right that you can't get damages, even when there's a bankruptcy court order, it's basically a declaratory judgment saying that it will be unlawful for you to use the mark, then you wouldn't be able to get damages even under their theory of the case that you can take away the license in bankruptcy by rejecting it and terminating it. You would leave the counter-party with nothing unless they went back into court and asked for an injunction against the thing the court just told it was already illegal. Is a very strange argument, so I'm not sure I follow that. Well, I'm not sure I follow you, so one of us is just confused and it may well be me. But if the bankruptcy court is simply saying you've rejected it, and if rejection only means that you don't prohibit, that wouldn't have prohibited it, but with the bankruptcy court here went further and said the effect of rejection is to terminate your licenses, to take it away from you. It adopted a respondents rule, which were respectfully sentenced to his wrong. I'm tracking that. So Petitioner is saying there's no answer. Well, back to the argument you were making. So the court tells them you can't, you don't have an exclusive license, that's been waived or not, but if they're not getting good, what's their, why isn't this case moved? Well, at least as I understand Petitioner's theory, and of course, we want to have a position on what's going to happen on remand, they are saying there is still money on the table they could have gotten, they could have sourced the goods from somewhere else, and no court has resolved these remaining claims. And so this is still a very much a live case, and we're really urging the court just to answer the trademark question here and to send it back down. The first circuit has a damaging precedent on the books that we think really just undermines the stability and value of trademark licenses across the board. I mean, you imagine a situation where you're a franchisee who's invested millions of dollars in reliance on the ability to put up the name McDonald's and the golden arches and all of that. Under respondents rule, what they're saying is as soon as the trademark owner goes into bankruptcy for any reason, they can pull the rug out from under every single one of its franchisees and basically put them to an extortion at choice between paying a higher royalty payment or shutting down their business and firing all their workers. And so we're really urging the court just to adopt the Sunbeam rule and to reverse it. And to get back to- Do you want to- I mean, the main question that I have, I think, is the same as just a leader, just a skagen hat. Yeah, that's what I was saying. I think, well, let me show you, where I think it's come from in an article by Professor Andrews and he says, look, I'm a debtor, you're the licensee, but say you least a house. There are two assets here. One is the house, which you least, and the other is a promise by me to replace the windows. All right

. So if you can analogize it to that, you win. Well, the more I think about it, I'm not sure. Why? A, there are a lot of special provisions in the trademark law and bankruptcy law about houses and leases. B, it's really a special kind of house. It's like a house that will collapse. Unless you keep it up, maybe like an igloo that you promise to air condition. You know, you break your promise to air condition? No more igloo. Now, if you seem to think of it like that, you think, no, there aren't two rights. Yeah. This upkeep business is an essential part of one right, which is going to give you the house to live in. So I, so I had, I would like you or Ms. Spinelli or, you know, at some point to tell me which is the strong, why is it stronger? It's not really like that. And I think a key portion of this, key piece of it is if the trademark owner stops performing the quality control and maintaining the distinctness of the mark to consumers, that does not instantly destroy the mark. Right, that is a process, a gradual, it's over time. And then another thing that makes it different from your igloo example is that at the end of the day, the licensee can still use the mark. Because the only thing that happens if you stop performing the quality control is eventually at the end of the day after some period of time, it'll be abandoned and returned at the public domain. And I really think it's actually, it's a lot more like the situation in our brief, which we talk about, of leasing somebody a photocop here where you agree to maintain it over time. It may well be that if you stop the maintenance on the photocopier, that eventually the photocopier is going to eventually break down. But that doesn't mean that you can repossess the copier by breaching your obligation to perform the maintenance, right? That's, I think, really the heart of this case. Just to say a couple words about why respondents are wrong. They're pressing an argument in their, in their briefs that you should draw a negative inference from N that the exact opposite rule should apply for trademarks. I just want to emphasize how bizarre it would be to read N that way. The whole point of N was to overrule, loop resolve, specific result as to patents. And nobody implicitly ratifies or endorses a court-mode reason. Reports said exactly the opposite, that they weren't taking a position. So it can't be that their entire purpose was so overrule. As I mentioned, they overruled it in part and didn't in part

. Because for certain contracts, they gave the less C's, more rights, or the less SOR's more rights. They exempted some things from royalty payments or royalty setoffs. They did a bunch of different things. So I think that's, I think really the overwhelmingly overruled loop resolve. That's like really the bottom line. And the differences are really far down in the details. This is a reticulated scheme that Congress established for patents that is, I admit, somewhat different than what would apply under the general background rule. Like under N3 and N4, this is far down in the weeds. And this is reproducing our brief in 14A and 15A. It imposes basically an obligation on the license sort actually continue performing. Some of the obligations under the contract, notwithstanding the rejection. In N4, it imposes a duty to continue performing even during the period where the trustee is still trying to figure out whether to assume or reject it. And so I think really the right lesson to take away from N is the one Justice Ginsburg was saying, which is that it doesn't put a thumb on the scale one way or the other. They just didn't answer the trademark question. Sometimes in a mission is just a no-mission. It's Judge Easterbrook put it. But so then what you have to do is just resolve this by looking at the background rule under A and G. And on that, I think we have just by far the better of the reading because G tells you what happens when you reject a contract. And the answer is that the rejection constitutes a breach. And I guess just one last point about G, which I think is very helpful to our position. And this is reproduced in the text at 8A. I mean, really, respondents are effectively reading N to be an exception to the general rule in G. They're saying that the general rule in G is that you can claw back somebody's rights, take back past performance. But if you look at the text of G, it just doesn't say that. It doesn't mention N. It doesn't say that it's an exception. And it identifies these two other provisions, H2 and I2, as exceptions to the general rule

. And they have nothing to do with what we're talking about here. Those are about situations where you get an offset round end. It's a point. I'm sorry, I don't really understand that argument. It seems as all of these are exceptions by their nature. And that goes contrary to the general rule that if it's an exception, the rule is different than the exception. No, I think what they really are are codifications of the background rule to clarify difficult situations that are risen. But I think that the greatest problem here is that rejection is not a contracture. When we talk about contracts, we talk about reputating them, terminating them, avoiding them, a bunch of different language. But bankruptcy is using a very specialized term, rejection. And your adversary is right that it's not generally that we reject a piece of a contract. We generally reject the entire contract. And so it's not the rejection of one claim under the contract. So there is some force to their argument that reading it the way you do is contrary to its language. If I could answer the question. Yes. So just, I mean, G says that it constitutes a breach. I've already walked through a couple of other things. The avoidance power is cut back on this. But just one last one is the history of this language, which we discuss in our brief, that it's grounded in the common law of trusts and receiverships. The idea that the trustee is not technically a party to the contract. And it has a choice of whether to assume or reject it. And the rule back then under the common law was the same one we're advocating now. The learned hand decision we cite in our brief drives this home. That the truck, that the bankrupt landlord, the trustee can stop paying for your heat and hot water. But he cannot evict you. So you keep your rights

. And so we're asking the Court to reverse. Thank you, Mr. Trip. Mr. Holwood, Dreamyer. Mr. Chief Justice, and may it please the Court. I'd like to start with the issue of muteness. And if we take the exclusive distribution rights off the table, which was the source of the $4 million of claims that Petitioner referred to in their reply at the Petition stage that kept the case from being moot, we're left only with a non-exclusive trademark license that is already expired. And any dispute about the rights under that is moot. As I said, it's already expired, so we don't have a forward-looking issue. It would only be a past issue. And as the questions have indicated, there was no use of the trademark during the post-rejection period. The bankruptcy court did not stop that non-exclusive use, correct? That's right. All of the bankruptcy court did was at our request to clear the party's rights. What was the meaning of rejection? And the only argument that Petitioner has that would, that they have some basis of claim against my client for the post-rejection period is that we sought that ruling from the court. Why is that enough to at least have an acorn of injury for Article III purposes, the uncertainty created by a declaratory judgment that effectively you can't use it may not prohibit you from using it, but it's sure me causing you to think twice about doing so, and there might be damages available. Your Honor, I think that would be directly contrary to the First Amendment, the Norpennington doctrine. We have a right to go to court to ask it to declare the party's rights, and that can't be the torsious act that creates damages on part of the other side. They have no claim against this because we took no action against them to stop them from using the trademark. Their own words in the First Circuit reflect this, because by their own words, and this is at J.A. 572, they say, but for the bankruptcy court decision, mission would have continued using cool-course trademarks. So it was only that decision, and our only act is asking the court to make a ruling, and I don't believe that this Court's precedent would allow a claim to be based on that. That's our mootness argument, and with that, I'm happy to proceed to the merits on the assumption that the Court might reach the point. K. Could you answer the Solicitor General's concern that a ruling in your favor would affect any number of other contracts, the copier example, the car example, any of the other or the McDonald's franchise? I'd be happy to, Your Honor, because I think the photocopier example is actually paradigmatic

. And there is, we mentioned that there is another section of the Code, Section 542A, that provides for a party who's in possession of property of the estate to return that property to the estate upon the filing of the petition. And if the copier is held under a lease, then the copier is property of the estate, and that provision would require the party to return the copier to the bankrupt to the bankruptcy estate unless they assume the contract, which they're going to do because that's a source of income. So as a practical matter, they always assume that the copier in position under the contract is worth more than getting back a used copier, which is not worth very much, but that's what the rule provides. If, on the other hand, the copier has already been sold, then it's no longer property of the estate, and the other party does not have to return it. And that's exactly what the rule that we advocate for. So under Section 336. And the McDonald's franchise? The McDonald's franchise is an interesting exception because they highlight the million dollars perhaps or more that's been invested by the franchisee. That does not distinguish the franchisee from any of the other creditors of the bankruptcy estate. A person might have invested millions of dollars as a bondholder in the estate. It might have been a trade creditor with millions of dollars of claims. All of those claims are reduced to often pennies on the dollars because they're pre-petition claims, and that's the same that Congress provided for counter parties. All the creditors of the bankruptcy estate have to bring these claims as pre-petition claims, and that's the critical language of 365G1. It says that it constitutes a breach, but doesn't stop there. It says that it constitutes a breach as of the day before the petition. It's a pre-petition claim for breach, and it's the temporal elements that's critical. And that temporal element continues through the other provisions. 502G1 says that you must bring your claims on the basis of rejection and that that claim is as if the breach had happened before the petition. And when you get to 1114, which is the discharge provision, it says that those claims that arose before the plan is confirmed are discharged. And then it specifically cross references 502. What do you say about the example of the lessor and the lessy? Well, your honor, ever since the 1934 Act, Congress has included exceptions that specifically deal with real estate. And so I would say we'd have to go to the terms of the specific exception in 365G1. Now, what's notable is that that exception to things one, it provides less rights, not more, but less rights than under petitioner's general rule. So instead of being an exception that protects a favored class, which is what Congress thought it was doing, it's instead a statement that puts them in a worse position. The other thing that's interesting about it is that 365G1 only applies to lessies where the lease has commenced. So in other words, the party whose lease has commenced, which is the party that would have a particular claim on Congress's interest, has lesser rights than a lessy whose lease has not yet commenced. If you do not have any. Is there any disagreement between you and the other side about what would happen outside bankruptcy? And as we're told, outside bankruptcy, one party's rejection doesn't terminate the rights of the opposing party. That's right, your honor. The out-the-non-bankruptcy rule is that the counter party has the choice. They can either treat the contract as having been a total breach once an anticipatory rejection. Counter party may treat it as a total breach, or it may seek to enforce the contract. What Congress did in 365? And you don't think that there is outside bankruptcy any special rule for trademark. You agree? No, no, I do think that there are special, I think the trademark is a special rule. But what I'm trying to explain is that that statute does not operate as they presuppose it does. Well, I just want you to tell me, and I think this is consistent with Justice Ginsburg's question, outside bankruptcy, what would be the rule in this context, in the trademark context? Well, your honor, I think our view is that you would have a breach of contract claim, but you would not have an ongoing use of the trademark because precisely because of the nature of the trademark. The nature of the trademark is that it is the trademark owner's reputation. All right, it's a day before bankruptcy. Nobody knows bankruptcy is going to take place. I am the holder of a trademark. I have leased it to you, and you can use it for 10 years, and I assume certain obligations. And I write you a letter, and say, ha, ha, ha, ha, I'm not going to do it, which is a material breach of the contract. Now you bring a lawsuit the day before, and you say, judge, you know, I want to keep the leased good, which could be anything jewels for a costume company, you know, I don't know about igles, but nonetheless, you say it could be anything. Okay, what's the law? Can I keep it or not keep it? Well, in our view, you can't be... So when you say in your view, I already stop you because it's amazing to me that there is no authority that's more on point than this real estate stuff, which as you say is absolutely filled with writings in the statute. All right, so you say in your view, that means you're not certain. Well, I don't think that there's case law that's clear on this, but the notion of the trademark as property, and McCarthy is very concerned. Now I'm not talking about trademarks, let's unnecessarily, but, but, I mean, they've had property law for 500 years, and people have breached for 500 years. But not trademarks, you're not. Well, okay, but... You couldn't, you couldn't even license a trademark because it was the person, the owner and the judge

. That's right, your honor. The out-the-non-bankruptcy rule is that the counter party has the choice. They can either treat the contract as having been a total breach once an anticipatory rejection. Counter party may treat it as a total breach, or it may seek to enforce the contract. What Congress did in 365? And you don't think that there is outside bankruptcy any special rule for trademark. You agree? No, no, I do think that there are special, I think the trademark is a special rule. But what I'm trying to explain is that that statute does not operate as they presuppose it does. Well, I just want you to tell me, and I think this is consistent with Justice Ginsburg's question, outside bankruptcy, what would be the rule in this context, in the trademark context? Well, your honor, I think our view is that you would have a breach of contract claim, but you would not have an ongoing use of the trademark because precisely because of the nature of the trademark. The nature of the trademark is that it is the trademark owner's reputation. All right, it's a day before bankruptcy. Nobody knows bankruptcy is going to take place. I am the holder of a trademark. I have leased it to you, and you can use it for 10 years, and I assume certain obligations. And I write you a letter, and say, ha, ha, ha, ha, I'm not going to do it, which is a material breach of the contract. Now you bring a lawsuit the day before, and you say, judge, you know, I want to keep the leased good, which could be anything jewels for a costume company, you know, I don't know about igles, but nonetheless, you say it could be anything. Okay, what's the law? Can I keep it or not keep it? Well, in our view, you can't be... So when you say in your view, I already stop you because it's amazing to me that there is no authority that's more on point than this real estate stuff, which as you say is absolutely filled with writings in the statute. All right, so you say in your view, that means you're not certain. Well, I don't think that there's case law that's clear on this, but the notion of the trademark as property, and McCarthy is very concerned. Now I'm not talking about trademarks, let's unnecessarily, but, but, I mean, they've had property law for 500 years, and people have breached for 500 years. But not trademarks, you're not. Well, okay, but... You couldn't, you couldn't even license a trademark because it was the person, the owner and the judge. So you can't think of any analogy or anything that would tell us when you walk in the day before, say, nobody knows about bankruptcy. And you say, right, or breach the contract, but I want to keep the property. There is no good case that would help me. Well, if we're talking about something other than trademark, anything that's in the trademark, then you're right that the non-bankruptcy law is that the counter party gets to choose, whether to treat that... Okay, so if the question is whether you have any authority for the proposition, that trademark is different, whether there's any authority that says, if you're outside bankruptcy and the license or breaches, is there any authority for the idea that the licensee then has to stop using the mark? I don't have a case to that. No, and then the argument really turns down to, which is where I sort of felt after reading the briefs, well, is this continuous obligation to keep the trademark going, which is on me, the breacher, is that enough? And at that point, I become uncertain, and one of the things cutting against you is that the licensee can keep up the trademark himself. I don't know if that's enough. So if you found anything that would really help me. But the licensee cannot keep up the trademark. That's the problem. The licensee, under the Lanham Act, the licensee may license the trademark as a, quote, related party. And it's not meaning, you know, subsidiary. It means that it is acting under the control of the trademark owner. Without that control, the trademark no longer serves as the source of identifying for the consumers that is a genuine article. That's why trademarks are recognized as property of the licensee. So the licensee can't take any steps when a third party is infringing the trademark regardless of what the licensee or thinks? No, as a licensee is certainly injured by those infringing the infringing of the licensee or who enforces the trademark. Because it is the licensee or's reputation, and the law imposes on the licensee or that it may be the licensee or's reputation, but it's the licensee's income, right? If the trademark no longer has value, that certainly undermines the value that the licensee saw in the original contract. It may be, but again, this is why McCarthy specifically warns against analogies of trademark to other forms of property, even those that look very similar, like patents. Because trademarks require a unity of ownership. All goodwill must accrue to the trademark owner. That may be, but there are thousands of McDonald's, I guess, firms that have leased the word McDonald. And if one of the somehow super-McDonald went bankrupt, couldn't those trustees say the people in this neighborhood trust me to have real McDonald's? And what I'll do is I will look at every hamburger, and I will make certain that these hamburgers are exactly the same as they were when McDonald was still alive or whatever. Now, he doesn't have a right to do that. Because I got the impression of the other greasy does. Once the trademark owner ceases to control the mark and enforce the quality, then it becomes an abandoned trademark, and it loses its value

. So you can't think of any analogy or anything that would tell us when you walk in the day before, say, nobody knows about bankruptcy. And you say, right, or breach the contract, but I want to keep the property. There is no good case that would help me. Well, if we're talking about something other than trademark, anything that's in the trademark, then you're right that the non-bankruptcy law is that the counter party gets to choose, whether to treat that... Okay, so if the question is whether you have any authority for the proposition, that trademark is different, whether there's any authority that says, if you're outside bankruptcy and the license or breaches, is there any authority for the idea that the licensee then has to stop using the mark? I don't have a case to that. No, and then the argument really turns down to, which is where I sort of felt after reading the briefs, well, is this continuous obligation to keep the trademark going, which is on me, the breacher, is that enough? And at that point, I become uncertain, and one of the things cutting against you is that the licensee can keep up the trademark himself. I don't know if that's enough. So if you found anything that would really help me. But the licensee cannot keep up the trademark. That's the problem. The licensee, under the Lanham Act, the licensee may license the trademark as a, quote, related party. And it's not meaning, you know, subsidiary. It means that it is acting under the control of the trademark owner. Without that control, the trademark no longer serves as the source of identifying for the consumers that is a genuine article. That's why trademarks are recognized as property of the licensee. So the licensee can't take any steps when a third party is infringing the trademark regardless of what the licensee or thinks? No, as a licensee is certainly injured by those infringing the infringing of the licensee or who enforces the trademark. Because it is the licensee or's reputation, and the law imposes on the licensee or that it may be the licensee or's reputation, but it's the licensee's income, right? If the trademark no longer has value, that certainly undermines the value that the licensee saw in the original contract. It may be, but again, this is why McCarthy specifically warns against analogies of trademark to other forms of property, even those that look very similar, like patents. Because trademarks require a unity of ownership. All goodwill must accrue to the trademark owner. That may be, but there are thousands of McDonald's, I guess, firms that have leased the word McDonald. And if one of the somehow super-McDonald went bankrupt, couldn't those trustees say the people in this neighborhood trust me to have real McDonald's? And what I'll do is I will look at every hamburger, and I will make certain that these hamburgers are exactly the same as they were when McDonald was still alive or whatever. Now, he doesn't have a right to do that. Because I got the impression of the other greasy does. Once the trademark owner ceases to control the mark and enforce the quality, then it becomes an abandoned trademark, and it loses its value. It's a, well, what happens if it's an abandoned trademark? Can you use an abandoned trademark? Well, it's no longer a trademark. It can a person can. He can. Okay. If he can, and here we're dealing with non-exclusive licenses, why isn't that his problem? Well, your honor, again, the rule, the general rule, under the 365G, is that all claims for breach of that contract have to be brought pre-petition. And that's because a pre-petition claim is pennies on the dollar, a post-petition claim is dollars for dollar. If you allow the counterparty to choose, do I want pre-petition pennies or do I want post-petition dollars, they're always going to choose dollars. And that would frustrate Congress's purpose of ensuring that all claims are brought, but resolved and discharged as part of the bankruptcy. And that's why Congress knew that it had to provide all of the exceptions to the rule. Okay, but that's your, that's your bigger argument, which is not a trademark argument. That's an argument about everything, right? Which is that we should not read G to say that, you know, what G says, honestly, G says, constitutes a breach. That suggests that you just look to the effects of a breach under non-bankruptcy law. Why does and G say that? What G says is that it constitutes a breach pre-bankruptcy. So the question is, what are the claims that have to be brought? Are they all claims? Is it a total breach and you have to bring the full-prime claims? Are there some rights that continue? If Congress thought that some rights would continue? But what you were saying, Mr. Hallwood, Dreamire, is that what G tells you is that you can unwind the entire deal. And that's not the effect of a breach outside of bankruptcy in, in, in, you certainly in the usual context. It can be, but the non-bankruptcy rule gives that choice to the counterparty, and Congress flipped that in 365. It's only in the exceptions that the counterparty has the choice. What language are you pointing to in 365, 365G that says anything other than we look to see what happens when you breach? Hallwood, the principle language is that it's a pre-petition breach. And then you have to trace it through, and I realize the bankruptcy code is very convoluted, but you have to trace it through 5.2G1. I'm sure you can, but I just, to explain why it's going to take me some steps. 5.02G1 says that a claim that arises from rejection must be brought administered and is discharged under the general rule as if it had a risen pre-bankruptcy. And then the discharge statute, 1114, also refers to 5.02G. It says that all claims that arose pre-conformation are discharged

. It's a, well, what happens if it's an abandoned trademark? Can you use an abandoned trademark? Well, it's no longer a trademark. It can a person can. He can. Okay. If he can, and here we're dealing with non-exclusive licenses, why isn't that his problem? Well, your honor, again, the rule, the general rule, under the 365G, is that all claims for breach of that contract have to be brought pre-petition. And that's because a pre-petition claim is pennies on the dollar, a post-petition claim is dollars for dollar. If you allow the counterparty to choose, do I want pre-petition pennies or do I want post-petition dollars, they're always going to choose dollars. And that would frustrate Congress's purpose of ensuring that all claims are brought, but resolved and discharged as part of the bankruptcy. And that's why Congress knew that it had to provide all of the exceptions to the rule. Okay, but that's your, that's your bigger argument, which is not a trademark argument. That's an argument about everything, right? Which is that we should not read G to say that, you know, what G says, honestly, G says, constitutes a breach. That suggests that you just look to the effects of a breach under non-bankruptcy law. Why does and G say that? What G says is that it constitutes a breach pre-bankruptcy. So the question is, what are the claims that have to be brought? Are they all claims? Is it a total breach and you have to bring the full-prime claims? Are there some rights that continue? If Congress thought that some rights would continue? But what you were saying, Mr. Hallwood, Dreamire, is that what G tells you is that you can unwind the entire deal. And that's not the effect of a breach outside of bankruptcy in, in, in, you certainly in the usual context. It can be, but the non-bankruptcy rule gives that choice to the counterparty, and Congress flipped that in 365. It's only in the exceptions that the counterparty has the choice. What language are you pointing to in 365, 365G that says anything other than we look to see what happens when you breach? Hallwood, the principle language is that it's a pre-petition breach. And then you have to trace it through, and I realize the bankruptcy code is very convoluted, but you have to trace it through 5.2G1. I'm sure you can, but I just, to explain why it's going to take me some steps. 5.02G1 says that a claim that arises from rejection must be brought administered and is discharged under the general rule as if it had a risen pre-bankruptcy. And then the discharge statute, 1114, also refers to 5.02G. It says that all claims that arose pre-conformation are discharged. And then it specifically references the claim specified in 5.02G. Why? Because what 5.02G does is make clear that all claims based on the breach that is the rejection are deemed pre-petition breach. If Congress thought that some of those claims would be brought for pennies, but other claims could be brought for full dollars, Congress would have told us where that line was, and it didn't. What instead, Congress, is it provided the general rule that the, instead of the counterparty getting the choice, treated as a total breach, terminated, or pseudo enforce the debtor, the trustee gets that choice. I'm going to treat it as a total breach, terminated. And then what the exceptions do in each of them is it gives the counterparty a choice. So now it's the exception. Now, as in non-bankruptcy law, the counterparty gets the choice. To treat it as terminated, that's the general rule when Congress enacted, and they said that's the general rule what would apply apart from the exception, or accept these rights. But the rights that are accepted are a subset of rights that would exist under non-bankruptcy law. And I'll point you to N in particular, because N makes clear that the following rights that the patentee, that the licensee would not, would have under non-bankruptcy law are not available to it. Okay? The right to specific performance, the right to updates in the software or the patent, the right to set off that would be available under non-bankruptcy law, the right to an administrative claim. All of those rights that a party would have under non-bankruptcy law, the counterparty does not have if they elect the rights that Congress has provided them under N. So the idea that Congress adopted this very detailed exception that goes on for pages to provide for patenties licenses, rather patent licensees, because they were a favored party, and that in the end those are fewer and lesser than the rights of trademark owners, or that patent licensees would have had had there been no exception at all. So the following that the scholars in this field, the bankruptcy field, disagree with your interpretation, and they say, Lubezal was wrong, and Sundeen was right. Well, Your Honor, it's not a uniform view. We pointed to articles that agree with us. The Peter Mennell article agrees that upon the rejection of trademark license, the terminated and said they have a claim for pre-bankruptcy pennies on the dollar. And of course, the Wilton article says the same, Mr. Wilton is my co-counsel, so I understand you may discount that. But it is absolutely not true that the views are unanimous in one respect. Among the amici that the other side have are the inter and other organizations that have gone to Congress many times to ask Congress to adopt an exception similar to end for trademark licensees, and Congress has refused to do so. So now they're asking this Court to do what they have failed to obtain from Congress. But note when they went to Congress to ask them to adopt an exception, they understood that it had to be nuanced. It had to balance the party's respective rights

. And then it specifically references the claim specified in 5.02G. Why? Because what 5.02G does is make clear that all claims based on the breach that is the rejection are deemed pre-petition breach. If Congress thought that some of those claims would be brought for pennies, but other claims could be brought for full dollars, Congress would have told us where that line was, and it didn't. What instead, Congress, is it provided the general rule that the, instead of the counterparty getting the choice, treated as a total breach, terminated, or pseudo enforce the debtor, the trustee gets that choice. I'm going to treat it as a total breach, terminated. And then what the exceptions do in each of them is it gives the counterparty a choice. So now it's the exception. Now, as in non-bankruptcy law, the counterparty gets the choice. To treat it as terminated, that's the general rule when Congress enacted, and they said that's the general rule what would apply apart from the exception, or accept these rights. But the rights that are accepted are a subset of rights that would exist under non-bankruptcy law. And I'll point you to N in particular, because N makes clear that the following rights that the patentee, that the licensee would not, would have under non-bankruptcy law are not available to it. Okay? The right to specific performance, the right to updates in the software or the patent, the right to set off that would be available under non-bankruptcy law, the right to an administrative claim. All of those rights that a party would have under non-bankruptcy law, the counterparty does not have if they elect the rights that Congress has provided them under N. So the idea that Congress adopted this very detailed exception that goes on for pages to provide for patenties licenses, rather patent licensees, because they were a favored party, and that in the end those are fewer and lesser than the rights of trademark owners, or that patent licensees would have had had there been no exception at all. So the following that the scholars in this field, the bankruptcy field, disagree with your interpretation, and they say, Lubezal was wrong, and Sundeen was right. Well, Your Honor, it's not a uniform view. We pointed to articles that agree with us. The Peter Mennell article agrees that upon the rejection of trademark license, the terminated and said they have a claim for pre-bankruptcy pennies on the dollar. And of course, the Wilton article says the same, Mr. Wilton is my co-counsel, so I understand you may discount that. But it is absolutely not true that the views are unanimous in one respect. Among the amici that the other side have are the inter and other organizations that have gone to Congress many times to ask Congress to adopt an exception similar to end for trademark licensees, and Congress has refused to do so. So now they're asking this Court to do what they have failed to obtain from Congress. But note when they went to Congress to ask them to adopt an exception, they understood that it had to be nuanced. It had to balance the party's respective rights. It had to, for example, provide that you had to continue to conform to trademark standards. And for example, that you have to continue to pay your share of advertising fees. All of these are things that are different because of trademark, because of the duty of control, because of the need to maintain consistency. And Congress could do that in a statute. That's what was proposed. Congress is declined to do so. Any other? Let me be sure I'm not missing something. Forget bankruptcy. Think of contract law over the course of the centuries. All right? Now, as I started out, A breaches a provision. The ordinary rule is B can keep the property that he's got. If he wants, isn't that the ordinary rule? But then there are lots, there should be lots of not ordinary cases. There should be lots of cases where maybe not like Igles, but the property is severely injured, disappears, da, da, da. Unless the breach or keeps it up. And in those non-bankruptcy cases, what happens? Does he, does, does, does, does, does, does he, what happens? Well, Your Honor, previously I said that I was not aware of a case that specifically held that breach by a license or ends the licensees right to use the mark. My colleagues have, have reminded me of the seventh circuit's decision in Gorenstein Enterprises V quality care USA 874, F 2nd 431, which holds that it does, and the licensees right to use the mark. Again, I think that's because of the nature of trademark that it represents the, the owner's reputation, the unitary theory of ownership, which is unique to trademark and the fact that without that control, there is no related party to, to use the, the, the mark and therefore it ceases to be affected. So this is a special rule where outside of bankruptcy, this is the special rule for trademarks. It's different from the rule that would apply outside bankruptcy for, let's say, least property. And it's the reason why there's a different rule is because of the duty of the license or to maintain the quality of the property. Right. I thought you were saying exactly the opposite, Mr. Hallwood, Dreamyer. I mean, you said this is consistent with the rule for photocopiers and your entire piece. In bankruptcy, in bankruptcy, that's right. I thought Justice Alita said this is a way to do with nine bank. Outside bankruptcy

. It had to, for example, provide that you had to continue to conform to trademark standards. And for example, that you have to continue to pay your share of advertising fees. All of these are things that are different because of trademark, because of the duty of control, because of the need to maintain consistency. And Congress could do that in a statute. That's what was proposed. Congress is declined to do so. Any other? Let me be sure I'm not missing something. Forget bankruptcy. Think of contract law over the course of the centuries. All right? Now, as I started out, A breaches a provision. The ordinary rule is B can keep the property that he's got. If he wants, isn't that the ordinary rule? But then there are lots, there should be lots of not ordinary cases. There should be lots of cases where maybe not like Igles, but the property is severely injured, disappears, da, da, da. Unless the breach or keeps it up. And in those non-bankruptcy cases, what happens? Does he, does, does, does, does, does, does he, what happens? Well, Your Honor, previously I said that I was not aware of a case that specifically held that breach by a license or ends the licensees right to use the mark. My colleagues have, have reminded me of the seventh circuit's decision in Gorenstein Enterprises V quality care USA 874, F 2nd 431, which holds that it does, and the licensees right to use the mark. Again, I think that's because of the nature of trademark that it represents the, the owner's reputation, the unitary theory of ownership, which is unique to trademark and the fact that without that control, there is no related party to, to use the, the, the mark and therefore it ceases to be affected. So this is a special rule where outside of bankruptcy, this is the special rule for trademarks. It's different from the rule that would apply outside bankruptcy for, let's say, least property. And it's the reason why there's a different rule is because of the duty of the license or to maintain the quality of the property. Right. I thought you were saying exactly the opposite, Mr. Hallwood, Dreamyer. I mean, you said this is consistent with the rule for photocopiers and your entire piece. In bankruptcy, in bankruptcy, that's right. I thought Justice Alita said this is a way to do with nine bank. Outside bankruptcy. So I don't, I don't understand why there would be a special rule for trademark. Outside bankruptcy that would be, it would be predicated on the license or as failure to exercise the quality control. And so because, because the license or doesn't want to do that, the license or, in breach of the contract, gets a more favorable result. It doesn't seem to make any sense. Well, your honor, again, I think it's because of the unique nature of the trademark as being only, you can only have a valid license of the trademark if there is that control that's specified by the Lanamaq. And so if you don't have that control, then you no longer have a valid. I'm sorry, but I don't know why that doesn't control non-bankruptcy rights. If your point would seem to control both, but it doesn't seem to, you're saying bankruptcy gives you more rights. Well, what we're saying is that there, we think that with trademarks, especially, you can't continue to exercise the trademark license after rejection. And that, because of the unique character of trademarks. But under our view, it's true generally as well. Because if you have a lease of a photo copier, the general rule of 365G is that if you, if you reject a lease of a photo copier, that lease now is effectively terminated. It's been reduced to a claim for pre-petition damages. And 542a would tell us that the possessor of the photo copier has to return it to the estate unless the lease is assumed, which it normally is, because it's more beneficial. So the general rule is that these types of ongoing relationships are terminated. They're reduced to a claim for pre-branded-compci damages, breach of contract damages that are paid pennies on the dollar, and that it's not up to the counterpart to decide they don't want pennies on the dollar, they would rather have dollars for dollar. Because if that were the case, then no counterparty would bring a claim for pre-banker seat breach. They would all wait and try to enforce, see, specifically, for formalment. But you have any argument that would limit a ruling in your favor just to trademark law. Because it seems to me that you're asking us to do exactly what the other side wants us to do to announce a general interpretation of this provision that basically says these types of contracts actually do survive. Well, let's see, is have the right to terminate in part and keep other rights a lot. Well, you're right. I thought when I read your briefs that you had an argument as to why we should limit our ruling to trademark law, but there's no way to do that even under your interpretation. No, no, you're all right. I think that there is. First of all, all we're asking the Court to do is adhere to its ruling in Bill Disco, which said that the effect of rejection is that the contract is no longer an enforceable contract. That's our rule

. So I don't, I don't understand why there would be a special rule for trademark. Outside bankruptcy that would be, it would be predicated on the license or as failure to exercise the quality control. And so because, because the license or doesn't want to do that, the license or, in breach of the contract, gets a more favorable result. It doesn't seem to make any sense. Well, your honor, again, I think it's because of the unique nature of the trademark as being only, you can only have a valid license of the trademark if there is that control that's specified by the Lanamaq. And so if you don't have that control, then you no longer have a valid. I'm sorry, but I don't know why that doesn't control non-bankruptcy rights. If your point would seem to control both, but it doesn't seem to, you're saying bankruptcy gives you more rights. Well, what we're saying is that there, we think that with trademarks, especially, you can't continue to exercise the trademark license after rejection. And that, because of the unique character of trademarks. But under our view, it's true generally as well. Because if you have a lease of a photo copier, the general rule of 365G is that if you, if you reject a lease of a photo copier, that lease now is effectively terminated. It's been reduced to a claim for pre-petition damages. And 542a would tell us that the possessor of the photo copier has to return it to the estate unless the lease is assumed, which it normally is, because it's more beneficial. So the general rule is that these types of ongoing relationships are terminated. They're reduced to a claim for pre-branded-compci damages, breach of contract damages that are paid pennies on the dollar, and that it's not up to the counterpart to decide they don't want pennies on the dollar, they would rather have dollars for dollar. Because if that were the case, then no counterparty would bring a claim for pre-banker seat breach. They would all wait and try to enforce, see, specifically, for formalment. But you have any argument that would limit a ruling in your favor just to trademark law. Because it seems to me that you're asking us to do exactly what the other side wants us to do to announce a general interpretation of this provision that basically says these types of contracts actually do survive. Well, let's see, is have the right to terminate in part and keep other rights a lot. Well, you're right. I thought when I read your briefs that you had an argument as to why we should limit our ruling to trademark law, but there's no way to do that even under your interpretation. No, no, you're all right. I think that there is. First of all, all we're asking the Court to do is adhere to its ruling in Bill Disco, which said that the effect of rejection is that the contract is no longer an enforceable contract. That's our rule. This Court decided it in Bill Disco. It was in the NLRI context, but the first part of the opinion is all about how why, you know, collective bargaining agreements are subject to 365 ANG, just like any other contract. And so when the Court says it's somewhat different because that requires actual affirmative obligations by the employers. Well, you're not arguing the employer has to, the trademark owner has to continue his rights. One of the rights that was deemed one that had to be brought as a pre-petition claim in Bill Disco was a claim based upon the loss of seniority rights. Seniority rights is a form of property rights that would be protected certainly by the due process clause. And yet, that claim for the value of the seniority rights had to be brought as a pre-petition claim. It couldn't just be enforced against the employer anymore. It was reduced to a claim for pre-petition damages. And that's the rule that were articulate. But even if 365 didn't work the way we say, even if the general rule of 365 G is that non-bankruptcy law provides such that the exceptions become superfluous and actually give the favored parties fewer rights than the general rule would provide, which is, of course, contrary to everything this Court has ever said about exceptions, which they're called, exceptions in 365 G. We would still have an argument. But so could I understand the sort of nature of the argument? I mean, you have your general argument and the way that goes as Ms. Spanelli says, the effective rejection is breach, and you say the effective rejection is recision. And that's the basic argument where, you know, honestly, Ms. Spanelli has this language that says it constitutes a breach. So then you say, even if Ms. Spanelli is right on that, and we just look to what it means to breach outside non-outside bankruptcy law, then you say we have a special rule for trade marks because trade marks are different outside bankruptcy law, and you point us to a single seventh circuit case. Is that correct? And the nature of a trademark. And McCarthy explains the rule of unitary ownership that it's a different type of property that the property is really just the property interest in the owner's reputation and the fact that the whole notion of licensing, which was a new advent in trademark, was because the licensee is treated as a related party, because it is operating under the control. So it is in the nature of the, it is in the nature of trademark that it is subject to that control, and without that control it ceases to exist. But I want to point the Court to the specific language of this trademark license, which I think really brings home the point, this trademark license, and this is a J.A. 3237 says that it grants the mission a non-exclusive, non-transferredable, limited license for the duration of the term to use its mark for the limited purposes of performing its obligations, exercising its rights under the agreement, subject to written trademark guidelines of the, of, of, of cool core, and the right of cool core to review and approve. In other words, all it was was a contract, right? It is not a property right in the license. There can't be because of the rule of unitary ownership. All it was was a contract right to use the trademark, subject to cool core's control

. This Court decided it in Bill Disco. It was in the NLRI context, but the first part of the opinion is all about how why, you know, collective bargaining agreements are subject to 365 ANG, just like any other contract. And so when the Court says it's somewhat different because that requires actual affirmative obligations by the employers. Well, you're not arguing the employer has to, the trademark owner has to continue his rights. One of the rights that was deemed one that had to be brought as a pre-petition claim in Bill Disco was a claim based upon the loss of seniority rights. Seniority rights is a form of property rights that would be protected certainly by the due process clause. And yet, that claim for the value of the seniority rights had to be brought as a pre-petition claim. It couldn't just be enforced against the employer anymore. It was reduced to a claim for pre-petition damages. And that's the rule that were articulate. But even if 365 didn't work the way we say, even if the general rule of 365 G is that non-bankruptcy law provides such that the exceptions become superfluous and actually give the favored parties fewer rights than the general rule would provide, which is, of course, contrary to everything this Court has ever said about exceptions, which they're called, exceptions in 365 G. We would still have an argument. But so could I understand the sort of nature of the argument? I mean, you have your general argument and the way that goes as Ms. Spanelli says, the effective rejection is breach, and you say the effective rejection is recision. And that's the basic argument where, you know, honestly, Ms. Spanelli has this language that says it constitutes a breach. So then you say, even if Ms. Spanelli is right on that, and we just look to what it means to breach outside non-outside bankruptcy law, then you say we have a special rule for trade marks because trade marks are different outside bankruptcy law, and you point us to a single seventh circuit case. Is that correct? And the nature of a trademark. And McCarthy explains the rule of unitary ownership that it's a different type of property that the property is really just the property interest in the owner's reputation and the fact that the whole notion of licensing, which was a new advent in trademark, was because the licensee is treated as a related party, because it is operating under the control. So it is in the nature of the, it is in the nature of trademark that it is subject to that control, and without that control it ceases to exist. But I want to point the Court to the specific language of this trademark license, which I think really brings home the point, this trademark license, and this is a J.A. 3237 says that it grants the mission a non-exclusive, non-transferredable, limited license for the duration of the term to use its mark for the limited purposes of performing its obligations, exercising its rights under the agreement, subject to written trademark guidelines of the, of, of, of cool core, and the right of cool core to review and approve. In other words, all it was was a contract, right? It is not a property right in the license. There can't be because of the rule of unitary ownership. All it was was a contract right to use the trademark, subject to cool core's control. And if that control goes away because you can't enforce that, that is one of the, one of the, of, you know, prospective performance obligations of a cool core in a rejected contract, you can't enforce that, then that control goes away, and with the control goes the license. Thank you very much. Thank you, counsel. Three minutes, Ms. Spinelli. Thank you. I have three points that I'll try to make quickly. First, the Gorenstein case that counsel referred to does not hold the detrared mark license or can unilaterally terminate a license by ceasing to exercise quality control. That was a case in which the licensee defaulted on the agreement for other reasons and then tried to continue using the trademark afterwards. Obviously, that can't be done. So there's no authority for the proposition that general contract principles don't apply to trademark licenses. Second, this is not about whether the debtor can abandon the trademark and get rid of its monitoring obligations. It's about whether the estate can take back the rights in the license and resell them to somebody else and distribute the proceeds among creditors, and it can't. Rejection is not avoidance. There are separate avoidance procedures in the code. Rejection doesn't let the estate claw back interests in the debtor's assets that the debtor conveyed before bankruptcy. So, just one question for me. If you continue using the mark, do the damages that you incur after the filing of the bankruptcy are they prepotitioned debt or post-petitioned debt? Are you going to get a priority for the damages that accrue after you declare bankruptcy? After bankruptcy has been declared? In this case, mission has an administrative claim stemming from the wrongful deprivation of its right to use the trademark post-rejection. It's a claim against the estate that arose post-petition, which is an administrative claim. So you're going to get more rights than N gives other intellectual property? Yes, so let me explain why that's exactly what should happen. Prior to bankruptcy, and this is just like a lease, just as prior, prior to bankruptcy, the debtor conveyed the licensee an interest in its intellectual property. We don't have to call that a property right. It doesn't matter what we call it, but it's a stick in the bundle of sticks just the same way that a lease grants the tenant a leasehold interest in the landlord's real property, and McCarthy makes this exact analogy. Once the license has been granted, the licenseor no longer has that stick. And it's uncontested that the licenseor can transfer only what it has. Respondent doesn't dispute that outside bankruptcy, if the licenseor sold the intellectual property, the buyer would take subject to the license, and we do have authority for this. It's in the blue brief

. And if that control goes away because you can't enforce that, that is one of the, one of the, of, you know, prospective performance obligations of a cool core in a rejected contract, you can't enforce that, then that control goes away, and with the control goes the license. Thank you very much. Thank you, counsel. Three minutes, Ms. Spinelli. Thank you. I have three points that I'll try to make quickly. First, the Gorenstein case that counsel referred to does not hold the detrared mark license or can unilaterally terminate a license by ceasing to exercise quality control. That was a case in which the licensee defaulted on the agreement for other reasons and then tried to continue using the trademark afterwards. Obviously, that can't be done. So there's no authority for the proposition that general contract principles don't apply to trademark licenses. Second, this is not about whether the debtor can abandon the trademark and get rid of its monitoring obligations. It's about whether the estate can take back the rights in the license and resell them to somebody else and distribute the proceeds among creditors, and it can't. Rejection is not avoidance. There are separate avoidance procedures in the code. Rejection doesn't let the estate claw back interests in the debtor's assets that the debtor conveyed before bankruptcy. So, just one question for me. If you continue using the mark, do the damages that you incur after the filing of the bankruptcy are they prepotitioned debt or post-petitioned debt? Are you going to get a priority for the damages that accrue after you declare bankruptcy? After bankruptcy has been declared? In this case, mission has an administrative claim stemming from the wrongful deprivation of its right to use the trademark post-rejection. It's a claim against the estate that arose post-petition, which is an administrative claim. So you're going to get more rights than N gives other intellectual property? Yes, so let me explain why that's exactly what should happen. Prior to bankruptcy, and this is just like a lease, just as prior, prior to bankruptcy, the debtor conveyed the licensee an interest in its intellectual property. We don't have to call that a property right. It doesn't matter what we call it, but it's a stick in the bundle of sticks just the same way that a lease grants the tenant a leasehold interest in the landlord's real property, and McCarthy makes this exact analogy. Once the license has been granted, the licenseor no longer has that stick. And it's uncontested that the licenseor can transfer only what it has. Respondent doesn't dispute that outside bankruptcy, if the licenseor sold the intellectual property, the buyer would take subject to the license, and we do have authority for this. It's in the blue brief. And because of that, the licenseor's creditors also cannot access the value of the license for their claim. Against the debtor. The quick question. The question is, what is your third? Outside of bankruptcy or in general, a lease, the less-sour lease is a trademark, the less-se, less-sour doesn't keep it up, doesn't follow the control. Does that stick, which is now in the hands of the less-se? Disolved, disappear, gone? No. It does not. May I? Sure. Respondent just to Robert's. No, it doesn't. It continues to exist. The ceasing quality control does not immediately dissolve the license. And because outside bankruptcy, the debtor doesn't have the right to transfer the license to a buyer or to its creditors. That is also true in bankruptcy. One of the most fundamental principles of bankruptcy is that the estate can't have any greater rights to property than the debtor itself had at the time of filing. The debtor's IP comes into the bankruptcy estate subject to the license, so the value of the license is not available to creditors, it belongs to the licensee. And nothing about rejection enables the estate to take that license back. Thank you. Thank you, counsel. The case is submitted.

Will your argument this morning in case 171657, mission product holdings versus temperature knowledge LLC? Ms. Spinelli? Ms. Chief Justice, and may it please the Court. Section 365 of the Bankruptcy Code lets the trustee decide whether the estate will become a party to an executory contract of the debtor. If so, the trustee assumes the contract and the estate steps into the debtor's shoes. If not, the trustee rejects the contract. The statute's plain text tells us what that means. Rejection constitutes a breach of such contract immediately before the date of the filing of the petition. The debtor will not fulfill any remaining unperformed obligations under the contract, and the counterparty will have a pre-petition claim against the debtor for any resulting damages. But that's all rejection is. The estate's decision not to take on the debtor's future performance obligations, which are therefore breached. The overwhelming consensus of courts and scholars is that rejection can't give the estate any greater rights with respect to the rejected contract than the debtor would have outside bankruptcy. And as respondent doesn't contest, outside bankruptcy, a license or, could not use its own breach of contract as a basis to terminate the licensees rights under the agreement? You just said, and I think it's correct, that the debtor would be, rejection means that the debtor has no obligation to perform future duties under the contract. But if the debtor in this case as the owner of the trademark in question did not continue to perform quality control activities in relationship to the mark, would that not imperil the future of the validity of the mark? So how can the debtor not continue to perform duties under the contract? So the quality control obligation is an obligation that's imposed by trademark law, not solely by the contract, and in many cases not at all by the contract. It is quite true that if- it's a trademark law, but to the extent that there's a rejection of the contract, the property owner is electing to say, as he, as it is entitled to say under the law, I reject that obligation vis-a-vis you. Hence, you can't continue to use my mark because I can't assure I'm not capable. That's why you reject a contract because it's not beneficial to the company. I reject that obligation. Hence, I reject you're being able to use it. With respect, just as so to my or that is not how it works. Why? When? Why? How, why isn't that exactly how it works? Meaning, once I lend you something and say it's conditioned of my approval of what you're doing, and I withdraw that approval, haven't I withdrawn? No. So, the license- so, let's imagine that the agreement itself imposed an obligation on the license-or to monitor the quality of the licensee's goods. If that is so, the license-or is free, the estate can choose not to assume that going forward obligation, but rejection only relates to contractual obligations. One of the trademark Amikai briefs said, if you're the licensee, you don't have the right to produce an item. If this license was one in which I gave you the license to sell my goods, that they, and I refuse to sell you the goods, they can't go out and make the goods. They can't go out and put the trademark on something else because they don't have the right to do that. Sotomayor, you're not going to do that. Sotomayor, you're not going to do that. I don't disagree, but the point is that you've been, that by rejecting the contract, I've basically said, you can't use my goods. You're entitled to sue me. You can't use my mark, you're entitled to sue me. Just to sue me, or let me explain why I think that's not correct. First of all, outside bankruptcy, as respondent has conceded, the license-or's breach would not let it take away the licensees right to use the mark. The license-or could say, I'm breaching all day long, but the licensee could continue to use the mark. When you say that, Ms. Spinelli, what law do you look to to find that? To find that principle. I mean, you say you look to outside bankruptcy, locked. Are you referring to state law? Is it a kind of common law? Trade marks are governed by state law, by federal and by federal statute, the Lanermact and the case law that's developed under the Lanermact. But this is actually a much simpler principle. It's simply that there is nothing that the license-or could do outside bankruptcy by breaching to stop the licensee from using the mark. The only thing that it could do is bring a suit to enjoy in the licensee from using the mark. And in that case, the license would be a complete defense. So outside bankruptcy, it can't be done. The other point is. I do have a question about 365N. Of course. Which is 365N is not the default rule with respect to intellectual property. It gives more and less rights to the lessores and less seas than the common law would permit. That's correct. That seems counterintuitive to me or counterlogical given the explanation that the Congress gave, that it understood that the trademark owners would get more rights than N provides to other licenseors in the intellectual property field. It mentioned the reason why the courts up to that time who had recognized rejection as termination that trademark owners were different because they had quality control problems. So I read that, and I think to myself, why would you think of giving trademark owners more rights or less rights than people under N? Let me explain just a so-to-my-or. It is certainly true that Congress made an advertent decision to leave trademarks out of 365N. But the legislative history makes it very clear that in enacting 365N, Congress did so because it thought the rule of Lubrizal, which is that rejection deprives the counter party of rights already conveyed under the agreement, was wrong, and that principle can't logically be confined. But it didn't think it was wrong completely because it did a sort of hybrid giving more and less at the same time. But it did completely reputiate the Lubrizal rule. It said it kept some of it, and it rejected others because of the situational difference. With respect to so-to-my-or, what it did is it said that the licensee can retain its rights under the contract, and that's precisely the issue in Lubrizal. It did, in addition, go on to set out a specific federal regime governing subsidiary issues that arise with respect to the relationship between the licensee and the licensee or following rejection, and you're correct that that regime differs in some respects from the state law that would otherwise apply. But there is no question whatsoever that Congress repudiated the basic rule of Lubrizal, saying that it was never intended that in addition to relieving itself of the debtors affirmative performance obligations, Congress never thought that rejection would enable the estate to take back rights already conveyed to the licensee. Could one say it didn't take any position on Lubrizal one way or another in the trademark context? It did quite specifically in the patent context, but it didn't either approve or disapprove. One could say that, Justice Ginsburg. I believe the reason that Congress didn't include trademarks in 365N is because it, first of all, it was dealing with an emergency with respect to patent licenses. The situation was described as urgent, that was what Lubrizal was about. Congress recognized that trademarks do have some differences from patents, and it thought that further study was required in order to shape the federal rules that would govern the parties' relationship. But the difference, it said specifically, didn't it what the difference that thought there was, right, which was this quality control obligation that Justice Salito started us off with? And I guess just to take us back there, why is it that that obligation does not make trade marks different under, you say we look to State law? I mean, are you saying that there's uniform State law that says that the quality control obligation sort of makes no difference with respect to this issue that the entire contract is not unwound? There is, I don't believe anyone would say that the entire contract can be unwound by the unilateral act of the licenseor. That's just basic contract law. Right. I mean, the question is whether the quality control obligation makes trademarks different from normal contract law. No. That's the question. And the answer is no. There is no support for that at all. What happens when the licenseor abdicates its quality control obligations, which again stem from trademark law, not from the contract, is that the licenseor risks abandonment of the mark. So the licenseor may lose its rights in the mark. If that happens, then the mark is up for grabs. The licensee can continue to use it, so can third parties, whoever can establish rights in it through use will be the new owner. But it absolutely does not change basic contract law principles, including that the breaching party cannot terminate the contract because it breaches. The opposite is true. I'm sorry, just a little. What would happen in this situation? So the debtor is the lessor of residential property. It rejects the lease. And you would say that, however, the less he could continue to live in the residential property, and the lessor would be relieved of any further obligations under the contract. Correct. But not statutory obligations. Correct. So if there was a statute that said that any lessor of residential property has to provide heat, they would continue to do that. Precisely. And the reason that's so is that the estate is the owner of the underlying property. So if it's an apartment building, the estate now owns the apartment building. The estate is not given any kind of exemption from generally applicable law relating to property ownership simply because it's in bankruptcy or because a contract relating to that asset has been rejected. This is the kind of thing that Trustee deals with every day. The Trustee is obligated with respect to all of the estate's assets to comply with generally applicable law. And it's also required to decide whether a particular asset is valuable enough to be worth investing estate funds in. So with regard to the quality control obligation, the Trustee will have to make a decision. Is this mark valuable to the estate? And if so, is it valuable enough to warrant making the really pretty minimal investment that's necessary to continue monitoring quality? I mean, just thinking, I'm sorry. No, please just as you. You know, just thinking about that example, you gave the analogy of the lessor of real property. There is in many cities, background law, that says once the landlord stops maintaining the property, the city insists that the tenant leave because the property isn't safe anymore. And I guess one question is whether there might be or is a similar background rule with respect to what happens to a trademark where the obligation for quality control is not being maintained. Is that a silly analogy? It's not a silly analogy at all, but there is not analogous law. You know, again, the license or is breached doesn't entitle it to terminate the licensee's rights. Because if we were to licensee have any rights with respect to quality control if the license or is not fulfilling its duty? So the licensee frequently takes upon itself the great burden of quality control. I mean, quality control is obviously in the licensee's interest as much as the license or is because the licensee wants to maintain the validity of the mark just as much as the licensee or and the licensee is selling goods and it doesn't want them to get a reputation for poor quality. Can I ask you to address the mootness question in this case? So as I understand it, let's put the exclusive distribution rights off the table. The court below said they're forfeited, assume for the moment that I'm not going to unforfeit them. So we just have the license arrangement. And as I understand it, your client wasn't under any orders not to use the license of the trademark. And so what theory are you injured and what damages might you have? The mission was injured because it was wrongly prevented from using the trademark on its goods post rejection. The bank has stopped. It had said two years before leading up to the agreement that it wasn't going to order any goods. Well, what happened just to so-to-my-ours that prior to bankruptcy, technology attempted to terminate the contract, mission placed a purchase order, technology said we're not going to fill that order. So it's true that immediately before the bankruptcy, mission hadn't been placing purchase orders because technology was refusing to fill them. And then once the rejection order was within place. Were you producing your own goods using their trademark or were you just buying from them? No. Oh, I'm sorry. No. At that point we were purchasing the goods from technology, which was a requirement under the contract. So they no longer had to supply you with goods. So why are we here? Meaning that's a brief. They have an obligation and you're open to damages. But without you producing the goods, I thought that brief from the meek I said that you're relieved from supplying goods. The lesser is relief from supplying. But just to so-to-my-our, we had a right under the agreement if technology failed to provide us with goods to source those goods elsewhere. May I reserve the remainder of my time? Yes. Thank you. Mr. Trip. Excuse me. Mr. Chief Justice, may I please the Court? If I could just pick up on a couple of the questions about whether trademarks are different and then say if you were to say about our rule, why respondents are wrong, and what the United States interest is here. So I think an important point about trademarks with the quality can be told. I'm not going to interrupt you again. But if you could add to that excellent list of things to do, discussing mootness. Thank you. I'll start with the moot dance. The case is not moot. This is at bottom acclaimed for money damages and it's still up in the air whether Petitioner is going to get a judgment in its favor. Respondent has raised a number of arguments on remand. Petitioner would lose even if you rule in their favor here. But Petitioner disputes all of that and no court has resolved those remaining disputes. Well, if we put a sub-exclusive distribution agreement, and I really don't want to belabor this, but I'd like you to focus specifically on the trademark license. If there was no order prohibiting Petitioner from using the trademark at any point, then where are the damages? This part of respondents' arguments, I'm not sure I understand because it seems to prove way too much, because if it's right that you can't get damages, even when there's a bankruptcy court order, it's basically a declaratory judgment saying that it will be unlawful for you to use the mark, then you wouldn't be able to get damages even under their theory of the case that you can take away the license in bankruptcy by rejecting it and terminating it. You would leave the counter-party with nothing unless they went back into court and asked for an injunction against the thing the court just told it was already illegal. Is a very strange argument, so I'm not sure I follow that. Well, I'm not sure I follow you, so one of us is just confused and it may well be me. But if the bankruptcy court is simply saying you've rejected it, and if rejection only means that you don't prohibit, that wouldn't have prohibited it, but with the bankruptcy court here went further and said the effect of rejection is to terminate your licenses, to take it away from you. It adopted a respondents rule, which were respectfully sentenced to his wrong. I'm tracking that. So Petitioner is saying there's no answer. Well, back to the argument you were making. So the court tells them you can't, you don't have an exclusive license, that's been waived or not, but if they're not getting good, what's their, why isn't this case moved? Well, at least as I understand Petitioner's theory, and of course, we want to have a position on what's going to happen on remand, they are saying there is still money on the table they could have gotten, they could have sourced the goods from somewhere else, and no court has resolved these remaining claims. And so this is still a very much a live case, and we're really urging the court just to answer the trademark question here and to send it back down. The first circuit has a damaging precedent on the books that we think really just undermines the stability and value of trademark licenses across the board. I mean, you imagine a situation where you're a franchisee who's invested millions of dollars in reliance on the ability to put up the name McDonald's and the golden arches and all of that. Under respondents rule, what they're saying is as soon as the trademark owner goes into bankruptcy for any reason, they can pull the rug out from under every single one of its franchisees and basically put them to an extortion at choice between paying a higher royalty payment or shutting down their business and firing all their workers. And so we're really urging the court just to adopt the Sunbeam rule and to reverse it. And to get back to- Do you want to- I mean, the main question that I have, I think, is the same as just a leader, just a skagen hat. Yeah, that's what I was saying. I think, well, let me show you, where I think it's come from in an article by Professor Andrews and he says, look, I'm a debtor, you're the licensee, but say you least a house. There are two assets here. One is the house, which you least, and the other is a promise by me to replace the windows. All right. So if you can analogize it to that, you win. Well, the more I think about it, I'm not sure. Why? A, there are a lot of special provisions in the trademark law and bankruptcy law about houses and leases. B, it's really a special kind of house. It's like a house that will collapse. Unless you keep it up, maybe like an igloo that you promise to air condition. You know, you break your promise to air condition? No more igloo. Now, if you seem to think of it like that, you think, no, there aren't two rights. Yeah. This upkeep business is an essential part of one right, which is going to give you the house to live in. So I, so I had, I would like you or Ms. Spinelli or, you know, at some point to tell me which is the strong, why is it stronger? It's not really like that. And I think a key portion of this, key piece of it is if the trademark owner stops performing the quality control and maintaining the distinctness of the mark to consumers, that does not instantly destroy the mark. Right, that is a process, a gradual, it's over time. And then another thing that makes it different from your igloo example is that at the end of the day, the licensee can still use the mark. Because the only thing that happens if you stop performing the quality control is eventually at the end of the day after some period of time, it'll be abandoned and returned at the public domain. And I really think it's actually, it's a lot more like the situation in our brief, which we talk about, of leasing somebody a photocop here where you agree to maintain it over time. It may well be that if you stop the maintenance on the photocopier, that eventually the photocopier is going to eventually break down. But that doesn't mean that you can repossess the copier by breaching your obligation to perform the maintenance, right? That's, I think, really the heart of this case. Just to say a couple words about why respondents are wrong. They're pressing an argument in their, in their briefs that you should draw a negative inference from N that the exact opposite rule should apply for trademarks. I just want to emphasize how bizarre it would be to read N that way. The whole point of N was to overrule, loop resolve, specific result as to patents. And nobody implicitly ratifies or endorses a court-mode reason. Reports said exactly the opposite, that they weren't taking a position. So it can't be that their entire purpose was so overrule. As I mentioned, they overruled it in part and didn't in part. Because for certain contracts, they gave the less C's, more rights, or the less SOR's more rights. They exempted some things from royalty payments or royalty setoffs. They did a bunch of different things. So I think that's, I think really the overwhelmingly overruled loop resolve. That's like really the bottom line. And the differences are really far down in the details. This is a reticulated scheme that Congress established for patents that is, I admit, somewhat different than what would apply under the general background rule. Like under N3 and N4, this is far down in the weeds. And this is reproducing our brief in 14A and 15A. It imposes basically an obligation on the license sort actually continue performing. Some of the obligations under the contract, notwithstanding the rejection. In N4, it imposes a duty to continue performing even during the period where the trustee is still trying to figure out whether to assume or reject it. And so I think really the right lesson to take away from N is the one Justice Ginsburg was saying, which is that it doesn't put a thumb on the scale one way or the other. They just didn't answer the trademark question. Sometimes in a mission is just a no-mission. It's Judge Easterbrook put it. But so then what you have to do is just resolve this by looking at the background rule under A and G. And on that, I think we have just by far the better of the reading because G tells you what happens when you reject a contract. And the answer is that the rejection constitutes a breach. And I guess just one last point about G, which I think is very helpful to our position. And this is reproduced in the text at 8A. I mean, really, respondents are effectively reading N to be an exception to the general rule in G. They're saying that the general rule in G is that you can claw back somebody's rights, take back past performance. But if you look at the text of G, it just doesn't say that. It doesn't mention N. It doesn't say that it's an exception. And it identifies these two other provisions, H2 and I2, as exceptions to the general rule. And they have nothing to do with what we're talking about here. Those are about situations where you get an offset round end. It's a point. I'm sorry, I don't really understand that argument. It seems as all of these are exceptions by their nature. And that goes contrary to the general rule that if it's an exception, the rule is different than the exception. No, I think what they really are are codifications of the background rule to clarify difficult situations that are risen. But I think that the greatest problem here is that rejection is not a contracture. When we talk about contracts, we talk about reputating them, terminating them, avoiding them, a bunch of different language. But bankruptcy is using a very specialized term, rejection. And your adversary is right that it's not generally that we reject a piece of a contract. We generally reject the entire contract. And so it's not the rejection of one claim under the contract. So there is some force to their argument that reading it the way you do is contrary to its language. If I could answer the question. Yes. So just, I mean, G says that it constitutes a breach. I've already walked through a couple of other things. The avoidance power is cut back on this. But just one last one is the history of this language, which we discuss in our brief, that it's grounded in the common law of trusts and receiverships. The idea that the trustee is not technically a party to the contract. And it has a choice of whether to assume or reject it. And the rule back then under the common law was the same one we're advocating now. The learned hand decision we cite in our brief drives this home. That the truck, that the bankrupt landlord, the trustee can stop paying for your heat and hot water. But he cannot evict you. So you keep your rights. And so we're asking the Court to reverse. Thank you, Mr. Trip. Mr. Holwood, Dreamyer. Mr. Chief Justice, and may it please the Court. I'd like to start with the issue of muteness. And if we take the exclusive distribution rights off the table, which was the source of the $4 million of claims that Petitioner referred to in their reply at the Petition stage that kept the case from being moot, we're left only with a non-exclusive trademark license that is already expired. And any dispute about the rights under that is moot. As I said, it's already expired, so we don't have a forward-looking issue. It would only be a past issue. And as the questions have indicated, there was no use of the trademark during the post-rejection period. The bankruptcy court did not stop that non-exclusive use, correct? That's right. All of the bankruptcy court did was at our request to clear the party's rights. What was the meaning of rejection? And the only argument that Petitioner has that would, that they have some basis of claim against my client for the post-rejection period is that we sought that ruling from the court. Why is that enough to at least have an acorn of injury for Article III purposes, the uncertainty created by a declaratory judgment that effectively you can't use it may not prohibit you from using it, but it's sure me causing you to think twice about doing so, and there might be damages available. Your Honor, I think that would be directly contrary to the First Amendment, the Norpennington doctrine. We have a right to go to court to ask it to declare the party's rights, and that can't be the torsious act that creates damages on part of the other side. They have no claim against this because we took no action against them to stop them from using the trademark. Their own words in the First Circuit reflect this, because by their own words, and this is at J.A. 572, they say, but for the bankruptcy court decision, mission would have continued using cool-course trademarks. So it was only that decision, and our only act is asking the court to make a ruling, and I don't believe that this Court's precedent would allow a claim to be based on that. That's our mootness argument, and with that, I'm happy to proceed to the merits on the assumption that the Court might reach the point. K. Could you answer the Solicitor General's concern that a ruling in your favor would affect any number of other contracts, the copier example, the car example, any of the other or the McDonald's franchise? I'd be happy to, Your Honor, because I think the photocopier example is actually paradigmatic. And there is, we mentioned that there is another section of the Code, Section 542A, that provides for a party who's in possession of property of the estate to return that property to the estate upon the filing of the petition. And if the copier is held under a lease, then the copier is property of the estate, and that provision would require the party to return the copier to the bankrupt to the bankruptcy estate unless they assume the contract, which they're going to do because that's a source of income. So as a practical matter, they always assume that the copier in position under the contract is worth more than getting back a used copier, which is not worth very much, but that's what the rule provides. If, on the other hand, the copier has already been sold, then it's no longer property of the estate, and the other party does not have to return it. And that's exactly what the rule that we advocate for. So under Section 336. And the McDonald's franchise? The McDonald's franchise is an interesting exception because they highlight the million dollars perhaps or more that's been invested by the franchisee. That does not distinguish the franchisee from any of the other creditors of the bankruptcy estate. A person might have invested millions of dollars as a bondholder in the estate. It might have been a trade creditor with millions of dollars of claims. All of those claims are reduced to often pennies on the dollars because they're pre-petition claims, and that's the same that Congress provided for counter parties. All the creditors of the bankruptcy estate have to bring these claims as pre-petition claims, and that's the critical language of 365G1. It says that it constitutes a breach, but doesn't stop there. It says that it constitutes a breach as of the day before the petition. It's a pre-petition claim for breach, and it's the temporal elements that's critical. And that temporal element continues through the other provisions. 502G1 says that you must bring your claims on the basis of rejection and that that claim is as if the breach had happened before the petition. And when you get to 1114, which is the discharge provision, it says that those claims that arose before the plan is confirmed are discharged. And then it specifically cross references 502. What do you say about the example of the lessor and the lessy? Well, your honor, ever since the 1934 Act, Congress has included exceptions that specifically deal with real estate. And so I would say we'd have to go to the terms of the specific exception in 365G1. Now, what's notable is that that exception to things one, it provides less rights, not more, but less rights than under petitioner's general rule. So instead of being an exception that protects a favored class, which is what Congress thought it was doing, it's instead a statement that puts them in a worse position. The other thing that's interesting about it is that 365G1 only applies to lessies where the lease has commenced. So in other words, the party whose lease has commenced, which is the party that would have a particular claim on Congress's interest, has lesser rights than a lessy whose lease has not yet commenced. If you do not have any. Is there any disagreement between you and the other side about what would happen outside bankruptcy? And as we're told, outside bankruptcy, one party's rejection doesn't terminate the rights of the opposing party. That's right, your honor. The out-the-non-bankruptcy rule is that the counter party has the choice. They can either treat the contract as having been a total breach once an anticipatory rejection. Counter party may treat it as a total breach, or it may seek to enforce the contract. What Congress did in 365? And you don't think that there is outside bankruptcy any special rule for trademark. You agree? No, no, I do think that there are special, I think the trademark is a special rule. But what I'm trying to explain is that that statute does not operate as they presuppose it does. Well, I just want you to tell me, and I think this is consistent with Justice Ginsburg's question, outside bankruptcy, what would be the rule in this context, in the trademark context? Well, your honor, I think our view is that you would have a breach of contract claim, but you would not have an ongoing use of the trademark because precisely because of the nature of the trademark. The nature of the trademark is that it is the trademark owner's reputation. All right, it's a day before bankruptcy. Nobody knows bankruptcy is going to take place. I am the holder of a trademark. I have leased it to you, and you can use it for 10 years, and I assume certain obligations. And I write you a letter, and say, ha, ha, ha, ha, I'm not going to do it, which is a material breach of the contract. Now you bring a lawsuit the day before, and you say, judge, you know, I want to keep the leased good, which could be anything jewels for a costume company, you know, I don't know about igles, but nonetheless, you say it could be anything. Okay, what's the law? Can I keep it or not keep it? Well, in our view, you can't be... So when you say in your view, I already stop you because it's amazing to me that there is no authority that's more on point than this real estate stuff, which as you say is absolutely filled with writings in the statute. All right, so you say in your view, that means you're not certain. Well, I don't think that there's case law that's clear on this, but the notion of the trademark as property, and McCarthy is very concerned. Now I'm not talking about trademarks, let's unnecessarily, but, but, I mean, they've had property law for 500 years, and people have breached for 500 years. But not trademarks, you're not. Well, okay, but... You couldn't, you couldn't even license a trademark because it was the person, the owner and the judge. So you can't think of any analogy or anything that would tell us when you walk in the day before, say, nobody knows about bankruptcy. And you say, right, or breach the contract, but I want to keep the property. There is no good case that would help me. Well, if we're talking about something other than trademark, anything that's in the trademark, then you're right that the non-bankruptcy law is that the counter party gets to choose, whether to treat that... Okay, so if the question is whether you have any authority for the proposition, that trademark is different, whether there's any authority that says, if you're outside bankruptcy and the license or breaches, is there any authority for the idea that the licensee then has to stop using the mark? I don't have a case to that. No, and then the argument really turns down to, which is where I sort of felt after reading the briefs, well, is this continuous obligation to keep the trademark going, which is on me, the breacher, is that enough? And at that point, I become uncertain, and one of the things cutting against you is that the licensee can keep up the trademark himself. I don't know if that's enough. So if you found anything that would really help me. But the licensee cannot keep up the trademark. That's the problem. The licensee, under the Lanham Act, the licensee may license the trademark as a, quote, related party. And it's not meaning, you know, subsidiary. It means that it is acting under the control of the trademark owner. Without that control, the trademark no longer serves as the source of identifying for the consumers that is a genuine article. That's why trademarks are recognized as property of the licensee. So the licensee can't take any steps when a third party is infringing the trademark regardless of what the licensee or thinks? No, as a licensee is certainly injured by those infringing the infringing of the licensee or who enforces the trademark. Because it is the licensee or's reputation, and the law imposes on the licensee or that it may be the licensee or's reputation, but it's the licensee's income, right? If the trademark no longer has value, that certainly undermines the value that the licensee saw in the original contract. It may be, but again, this is why McCarthy specifically warns against analogies of trademark to other forms of property, even those that look very similar, like patents. Because trademarks require a unity of ownership. All goodwill must accrue to the trademark owner. That may be, but there are thousands of McDonald's, I guess, firms that have leased the word McDonald. And if one of the somehow super-McDonald went bankrupt, couldn't those trustees say the people in this neighborhood trust me to have real McDonald's? And what I'll do is I will look at every hamburger, and I will make certain that these hamburgers are exactly the same as they were when McDonald was still alive or whatever. Now, he doesn't have a right to do that. Because I got the impression of the other greasy does. Once the trademark owner ceases to control the mark and enforce the quality, then it becomes an abandoned trademark, and it loses its value. It's a, well, what happens if it's an abandoned trademark? Can you use an abandoned trademark? Well, it's no longer a trademark. It can a person can. He can. Okay. If he can, and here we're dealing with non-exclusive licenses, why isn't that his problem? Well, your honor, again, the rule, the general rule, under the 365G, is that all claims for breach of that contract have to be brought pre-petition. And that's because a pre-petition claim is pennies on the dollar, a post-petition claim is dollars for dollar. If you allow the counterparty to choose, do I want pre-petition pennies or do I want post-petition dollars, they're always going to choose dollars. And that would frustrate Congress's purpose of ensuring that all claims are brought, but resolved and discharged as part of the bankruptcy. And that's why Congress knew that it had to provide all of the exceptions to the rule. Okay, but that's your, that's your bigger argument, which is not a trademark argument. That's an argument about everything, right? Which is that we should not read G to say that, you know, what G says, honestly, G says, constitutes a breach. That suggests that you just look to the effects of a breach under non-bankruptcy law. Why does and G say that? What G says is that it constitutes a breach pre-bankruptcy. So the question is, what are the claims that have to be brought? Are they all claims? Is it a total breach and you have to bring the full-prime claims? Are there some rights that continue? If Congress thought that some rights would continue? But what you were saying, Mr. Hallwood, Dreamire, is that what G tells you is that you can unwind the entire deal. And that's not the effect of a breach outside of bankruptcy in, in, in, you certainly in the usual context. It can be, but the non-bankruptcy rule gives that choice to the counterparty, and Congress flipped that in 365. It's only in the exceptions that the counterparty has the choice. What language are you pointing to in 365, 365G that says anything other than we look to see what happens when you breach? Hallwood, the principle language is that it's a pre-petition breach. And then you have to trace it through, and I realize the bankruptcy code is very convoluted, but you have to trace it through 5.2G1. I'm sure you can, but I just, to explain why it's going to take me some steps. 5.02G1 says that a claim that arises from rejection must be brought administered and is discharged under the general rule as if it had a risen pre-bankruptcy. And then the discharge statute, 1114, also refers to 5.02G. It says that all claims that arose pre-conformation are discharged. And then it specifically references the claim specified in 5.02G. Why? Because what 5.02G does is make clear that all claims based on the breach that is the rejection are deemed pre-petition breach. If Congress thought that some of those claims would be brought for pennies, but other claims could be brought for full dollars, Congress would have told us where that line was, and it didn't. What instead, Congress, is it provided the general rule that the, instead of the counterparty getting the choice, treated as a total breach, terminated, or pseudo enforce the debtor, the trustee gets that choice. I'm going to treat it as a total breach, terminated. And then what the exceptions do in each of them is it gives the counterparty a choice. So now it's the exception. Now, as in non-bankruptcy law, the counterparty gets the choice. To treat it as terminated, that's the general rule when Congress enacted, and they said that's the general rule what would apply apart from the exception, or accept these rights. But the rights that are accepted are a subset of rights that would exist under non-bankruptcy law. And I'll point you to N in particular, because N makes clear that the following rights that the patentee, that the licensee would not, would have under non-bankruptcy law are not available to it. Okay? The right to specific performance, the right to updates in the software or the patent, the right to set off that would be available under non-bankruptcy law, the right to an administrative claim. All of those rights that a party would have under non-bankruptcy law, the counterparty does not have if they elect the rights that Congress has provided them under N. So the idea that Congress adopted this very detailed exception that goes on for pages to provide for patenties licenses, rather patent licensees, because they were a favored party, and that in the end those are fewer and lesser than the rights of trademark owners, or that patent licensees would have had had there been no exception at all. So the following that the scholars in this field, the bankruptcy field, disagree with your interpretation, and they say, Lubezal was wrong, and Sundeen was right. Well, Your Honor, it's not a uniform view. We pointed to articles that agree with us. The Peter Mennell article agrees that upon the rejection of trademark license, the terminated and said they have a claim for pre-bankruptcy pennies on the dollar. And of course, the Wilton article says the same, Mr. Wilton is my co-counsel, so I understand you may discount that. But it is absolutely not true that the views are unanimous in one respect. Among the amici that the other side have are the inter and other organizations that have gone to Congress many times to ask Congress to adopt an exception similar to end for trademark licensees, and Congress has refused to do so. So now they're asking this Court to do what they have failed to obtain from Congress. But note when they went to Congress to ask them to adopt an exception, they understood that it had to be nuanced. It had to balance the party's respective rights. It had to, for example, provide that you had to continue to conform to trademark standards. And for example, that you have to continue to pay your share of advertising fees. All of these are things that are different because of trademark, because of the duty of control, because of the need to maintain consistency. And Congress could do that in a statute. That's what was proposed. Congress is declined to do so. Any other? Let me be sure I'm not missing something. Forget bankruptcy. Think of contract law over the course of the centuries. All right? Now, as I started out, A breaches a provision. The ordinary rule is B can keep the property that he's got. If he wants, isn't that the ordinary rule? But then there are lots, there should be lots of not ordinary cases. There should be lots of cases where maybe not like Igles, but the property is severely injured, disappears, da, da, da. Unless the breach or keeps it up. And in those non-bankruptcy cases, what happens? Does he, does, does, does, does, does, does he, what happens? Well, Your Honor, previously I said that I was not aware of a case that specifically held that breach by a license or ends the licensees right to use the mark. My colleagues have, have reminded me of the seventh circuit's decision in Gorenstein Enterprises V quality care USA 874, F 2nd 431, which holds that it does, and the licensees right to use the mark. Again, I think that's because of the nature of trademark that it represents the, the owner's reputation, the unitary theory of ownership, which is unique to trademark and the fact that without that control, there is no related party to, to use the, the, the mark and therefore it ceases to be affected. So this is a special rule where outside of bankruptcy, this is the special rule for trademarks. It's different from the rule that would apply outside bankruptcy for, let's say, least property. And it's the reason why there's a different rule is because of the duty of the license or to maintain the quality of the property. Right. I thought you were saying exactly the opposite, Mr. Hallwood, Dreamyer. I mean, you said this is consistent with the rule for photocopiers and your entire piece. In bankruptcy, in bankruptcy, that's right. I thought Justice Alita said this is a way to do with nine bank. Outside bankruptcy. So I don't, I don't understand why there would be a special rule for trademark. Outside bankruptcy that would be, it would be predicated on the license or as failure to exercise the quality control. And so because, because the license or doesn't want to do that, the license or, in breach of the contract, gets a more favorable result. It doesn't seem to make any sense. Well, your honor, again, I think it's because of the unique nature of the trademark as being only, you can only have a valid license of the trademark if there is that control that's specified by the Lanamaq. And so if you don't have that control, then you no longer have a valid. I'm sorry, but I don't know why that doesn't control non-bankruptcy rights. If your point would seem to control both, but it doesn't seem to, you're saying bankruptcy gives you more rights. Well, what we're saying is that there, we think that with trademarks, especially, you can't continue to exercise the trademark license after rejection. And that, because of the unique character of trademarks. But under our view, it's true generally as well. Because if you have a lease of a photo copier, the general rule of 365G is that if you, if you reject a lease of a photo copier, that lease now is effectively terminated. It's been reduced to a claim for pre-petition damages. And 542a would tell us that the possessor of the photo copier has to return it to the estate unless the lease is assumed, which it normally is, because it's more beneficial. So the general rule is that these types of ongoing relationships are terminated. They're reduced to a claim for pre-branded-compci damages, breach of contract damages that are paid pennies on the dollar, and that it's not up to the counterpart to decide they don't want pennies on the dollar, they would rather have dollars for dollar. Because if that were the case, then no counterparty would bring a claim for pre-banker seat breach. They would all wait and try to enforce, see, specifically, for formalment. But you have any argument that would limit a ruling in your favor just to trademark law. Because it seems to me that you're asking us to do exactly what the other side wants us to do to announce a general interpretation of this provision that basically says these types of contracts actually do survive. Well, let's see, is have the right to terminate in part and keep other rights a lot. Well, you're right. I thought when I read your briefs that you had an argument as to why we should limit our ruling to trademark law, but there's no way to do that even under your interpretation. No, no, you're all right. I think that there is. First of all, all we're asking the Court to do is adhere to its ruling in Bill Disco, which said that the effect of rejection is that the contract is no longer an enforceable contract. That's our rule. This Court decided it in Bill Disco. It was in the NLRI context, but the first part of the opinion is all about how why, you know, collective bargaining agreements are subject to 365 ANG, just like any other contract. And so when the Court says it's somewhat different because that requires actual affirmative obligations by the employers. Well, you're not arguing the employer has to, the trademark owner has to continue his rights. One of the rights that was deemed one that had to be brought as a pre-petition claim in Bill Disco was a claim based upon the loss of seniority rights. Seniority rights is a form of property rights that would be protected certainly by the due process clause. And yet, that claim for the value of the seniority rights had to be brought as a pre-petition claim. It couldn't just be enforced against the employer anymore. It was reduced to a claim for pre-petition damages. And that's the rule that were articulate. But even if 365 didn't work the way we say, even if the general rule of 365 G is that non-bankruptcy law provides such that the exceptions become superfluous and actually give the favored parties fewer rights than the general rule would provide, which is, of course, contrary to everything this Court has ever said about exceptions, which they're called, exceptions in 365 G. We would still have an argument. But so could I understand the sort of nature of the argument? I mean, you have your general argument and the way that goes as Ms. Spanelli says, the effective rejection is breach, and you say the effective rejection is recision. And that's the basic argument where, you know, honestly, Ms. Spanelli has this language that says it constitutes a breach. So then you say, even if Ms. Spanelli is right on that, and we just look to what it means to breach outside non-outside bankruptcy law, then you say we have a special rule for trade marks because trade marks are different outside bankruptcy law, and you point us to a single seventh circuit case. Is that correct? And the nature of a trademark. And McCarthy explains the rule of unitary ownership that it's a different type of property that the property is really just the property interest in the owner's reputation and the fact that the whole notion of licensing, which was a new advent in trademark, was because the licensee is treated as a related party, because it is operating under the control. So it is in the nature of the, it is in the nature of trademark that it is subject to that control, and without that control it ceases to exist. But I want to point the Court to the specific language of this trademark license, which I think really brings home the point, this trademark license, and this is a J.A. 3237 says that it grants the mission a non-exclusive, non-transferredable, limited license for the duration of the term to use its mark for the limited purposes of performing its obligations, exercising its rights under the agreement, subject to written trademark guidelines of the, of, of, of cool core, and the right of cool core to review and approve. In other words, all it was was a contract, right? It is not a property right in the license. There can't be because of the rule of unitary ownership. All it was was a contract right to use the trademark, subject to cool core's control. And if that control goes away because you can't enforce that, that is one of the, one of the, of, you know, prospective performance obligations of a cool core in a rejected contract, you can't enforce that, then that control goes away, and with the control goes the license. Thank you very much. Thank you, counsel. Three minutes, Ms. Spinelli. Thank you. I have three points that I'll try to make quickly. First, the Gorenstein case that counsel referred to does not hold the detrared mark license or can unilaterally terminate a license by ceasing to exercise quality control. That was a case in which the licensee defaulted on the agreement for other reasons and then tried to continue using the trademark afterwards. Obviously, that can't be done. So there's no authority for the proposition that general contract principles don't apply to trademark licenses. Second, this is not about whether the debtor can abandon the trademark and get rid of its monitoring obligations. It's about whether the estate can take back the rights in the license and resell them to somebody else and distribute the proceeds among creditors, and it can't. Rejection is not avoidance. There are separate avoidance procedures in the code. Rejection doesn't let the estate claw back interests in the debtor's assets that the debtor conveyed before bankruptcy. So, just one question for me. If you continue using the mark, do the damages that you incur after the filing of the bankruptcy are they prepotitioned debt or post-petitioned debt? Are you going to get a priority for the damages that accrue after you declare bankruptcy? After bankruptcy has been declared? In this case, mission has an administrative claim stemming from the wrongful deprivation of its right to use the trademark post-rejection. It's a claim against the estate that arose post-petition, which is an administrative claim. So you're going to get more rights than N gives other intellectual property? Yes, so let me explain why that's exactly what should happen. Prior to bankruptcy, and this is just like a lease, just as prior, prior to bankruptcy, the debtor conveyed the licensee an interest in its intellectual property. We don't have to call that a property right. It doesn't matter what we call it, but it's a stick in the bundle of sticks just the same way that a lease grants the tenant a leasehold interest in the landlord's real property, and McCarthy makes this exact analogy. Once the license has been granted, the licenseor no longer has that stick. And it's uncontested that the licenseor can transfer only what it has. Respondent doesn't dispute that outside bankruptcy, if the licenseor sold the intellectual property, the buyer would take subject to the license, and we do have authority for this. It's in the blue brief. And because of that, the licenseor's creditors also cannot access the value of the license for their claim. Against the debtor. The quick question. The question is, what is your third? Outside of bankruptcy or in general, a lease, the less-sour lease is a trademark, the less-se, less-sour doesn't keep it up, doesn't follow the control. Does that stick, which is now in the hands of the less-se? Disolved, disappear, gone? No. It does not. May I? Sure. Respondent just to Robert's. No, it doesn't. It continues to exist. The ceasing quality control does not immediately dissolve the license. And because outside bankruptcy, the debtor doesn't have the right to transfer the license to a buyer or to its creditors. That is also true in bankruptcy. One of the most fundamental principles of bankruptcy is that the estate can't have any greater rights to property than the debtor itself had at the time of filing. The debtor's IP comes into the bankruptcy estate subject to the license, so the value of the license is not available to creditors, it belongs to the licensee. And nothing about rejection enables the estate to take that license back. Thank you. Thank you, counsel. The case is submitted