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Vanderbilt Law Review

Philip L. Lu

First Page

1431

Abstract

In 1872, a young man named Claudio Alvarez Lefebre began manufacturing and selling high-quality rum in Cuba under the brand name "Ron Matusalem." In 1948, as the family-run business prospered, the company registered a trademark and corporate logo in the United States. Upon his death, Lefebre left the business-and the secret formulas for making his rum-to his wife and children. By the early 1960s, Lefebre's wife and children had immigrated to the United States, and they split the rum-making business into two separate corporations. These two distinct entities negotiated an executory contract in the form of a franchise agreement with a trademark license . This agreement granted the franchisee corporation the right to sell Ron Matusalem rums worldwide under the Ron Matusalem trademark. The franchisor corporation retained the right to control the nature and quality of the rums sold and the right to terminate the agreement if the franchisee failed to meet its standards. For the next two decades, the two corporations operated as a cohesive family business, or, as a court described them, a "loose knit strada of corporations."

... Part II of this Note examines relevant sections of 11 U.S.C. 365, subsequent amendments under the Intellectual Property Licenses in Bankruptcy Act ("IPLBA"), and theoretical interpretations and definitions of what "rejection" means within the context of bankruptcy law.

Part III analyzes the circuit split, discussing the merits and weaknesses of each approach. Part IV suggests that the Supreme Court resolve the circuit split by adopting a modified version of the Seventh and Third Circuits' approach, but adding the requirement that trademark licensees maintain the quality control standards initially contained in the parties' original licensing agreement.

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