Kodak’s recent filing for Chapter 11 bankruptcy saw a pillar of the American experience seek protection due to falling victim to the world’s digital revolution, and its demise will be followed by many more business failures from high-tech companies, both large and small.
Indeed, as our economy continues to become more technology-based, bankruptcies in which high-tech assets and issues predominate will become far more common. And because our technology-based economy is an incubator for both business success and failure, issues common to high-tech bankruptcies should be known by business lawyers, creditors, investors and management.
4. Benefits for licensees. Licensees of intellectual property can enjoy the benefits of their licenses even though their licensor files for Chapter 11. Generally, a licensee of intellectual property can enforce its right to use that license even though the licensor files for Chapter 11. Section 365 of the Bankruptcy Code greatly minimizes the legal effect on the licensee if the licensor walks away from the license (by rejection—a bankruptcy term of art) or simply fails. Protection for the licensee is not unlimited.