Are Intellectual Property Licenses Executory Contracts?
With certain important exceptions, the Bankruptcy Code permits Chapter 11 debtors to reject, assume or assume and assign to third parties intellectual property licenses that constitute executory contacts. The Bankruptcy Code does not define the term executory. Under the commonly cited Countryman definition, a contract is executory where both the debtor and the nondebtor party to the contract have unperformed obligations such that failure of either to complete performance would constitute a material breach excusing the performance of the other. Generally speaking, non-exclusive intellectual property licenses are considered executory contracts and exclusive licenses are not. Assuming and Assigning Intellectual Property Licenses in Bankruptcy Generally, a debtor licensor can assume an intellectual property license to the extent it satisfies the requirements of Section 365 of the Bankruptcy Code, including paying all existing defaults under the license and providing adequate assurance of f
