Brands and Bankruptcy

Congratulations to 3L Laura Steele, the winner of this year’s Frank DeGuire Award for the best student comment in the Marquette Intellectual Property Law Review.  Laura’s terrific comment, entitled “Actual or Hypothetical: Determining the Proper Test for Trademark Licensee Rights in Bankruptcy,” is available on SSRN.  Here is the abstract:

As trademark rights become an increasingly valuable asset in Chapter 11 reorganizations, it is critical for Congress and the courts to clarify how trademarks will be treated in bankruptcy, particularly where the debtor is a trademark licensee. Without clarity, Chapter 11 reorganization may not be a viable option.

This Comment urges that trademark licensees should not be stripped of a license simply because the licensee enters bankruptcy. Rather, where a licensee intends only to continue using an existing license under the terms of the existing agreement with the licensor, the licensee’s use of that license should be uninterrupted during reorganization. This recommendation, contrary to the position of trademark licensors, will not invade the province of trademark owners to control their marks.

To support this recommendation, this Comment examines the statutory frameworks of both trademark and bankruptcy law, legislative history of the Bankruptcy Code, and cases that illuminate the current circuit split over the rights of a trademark licensee in bankruptcy. Building on these elements, this Comment outlines an analytical approach that strikes a balance between the need for business reorganization and the duty of a trademark licensor to exercise control over its mark.

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The Business of Bigness

brandeisLast summer, Eric Dash of the New York Times wrote an excellent article on the problems associated with big business in the U.S.  Dash noted that almost 100 years ago, Supreme Court Justice Louis Brandeis wrote prophetically about the “curse of bigness.”  Justice Brandeis denounced generally the influence that big business had on U.S. politics and its economy.

Today, Brandies’s “curse of bigness” is incorporated into the less pejorative term for large U.S. companies — companies that are “too big to fail.”  Certainly in light of the recent U.S. financial crisis, people are well aware of the influence that these large U.S. companies have on U.S. politics and its economy.   But these “too big to fail” companies may also be creating moral hazards in business operations, and the U.S. has yet to establish a unified system for dealing with the business of bigness. 

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Proxy Amendments and Short-Term Shareholders

Conference roomFirst, thank you for the invitation to be the March Student Blogger.  I have significant experience in blogs.  But perhaps unfortunately for this blog, that experience is restricted to Nebraska football and Lost blogs.  And I don’t think this is the proper forum for discussions of the Huskers’ 2011 recruiting class or how the Valenzetti Equation may answer all your questions regarding Lost.  However, I am open to requests during my March tenure.

Moving on.

Several blogs on this site have addressed election issues and reform in the judicial and political spheres.   Yet, despite imminent changes with regard to the election of corporate directors, any discussion of corporate election reform has been noticeably absent.  I do not doubt that the rules regarding the election of directors will change significantly this year.

Specifically, on June 10, 2009, the SEC published proposed amendments to the federal proxy rules that would facilitate shareholders’ ability to nominate directors to company boards of directors. Under the current director election rules, shareholders seeking to nominate a competing slate of director candidates have to bear all costs of a proxy campaign.  Yet, all costs for the campaigns of the incumbent board’s nominees are paid for out of corporate funds.  That advantage to the board’s nominees coupled with the significant costs in mounting a proxy contest serve as effective barriers to dissident shareholders seeking to initiate an election contest.

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