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Licensee”s position improved?

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Licensee"s position improved?

Licensee"s position improved?

The fate of a licence if the licensor is declared bankrupt is far from straightforward. Generally, the licensee has an interest in being able to continue using the licence "as normal". A recent ruling by the Dutch Supreme Court appears to support this. There is, as yet, no unequivocal answer.

According to the Supreme Court”s Nebula ruling in 2006, contracting parties of bankrupt debtors cannot automatically exercise their rights under the agreement with that debtor vis-a-vis the receiver. This is because this may jeopardise the assets, to the detriment of the other creditors, whose proceeds are reduced. Although the case was not specifically about this, it is generally assumed that the Nebula ruling also applied to licence agreements. Consequently, licensees may be faced with a receiver who can oppose the licence.

Improvement for contracting party
The recent ruling of the Supreme Court does not relate specifically to licences either. The question of whether the receiver must tolerate a lease between the bankrupt party and his contracting party is paramount. The Supreme Court believes he should and considers that the receiver does not have the power to actively terminate such an agreement. The receiver only has the passive power not to fulfil an agreement, for example by not paying an amount due to the contracting party.

This judgment suggests that the receiver may not actively terminate a licence agreement. He must tolerate the licence agreement, allowing the licensee to continue reaping the benefits of the licence. However, whether this also applies to further actions under the licence following the bankruptcy, such as granting a sublicence, is a moot point. It would seem that the licensee”s position has (slightly) improved, although the fate of a licence in bankruptcy is still far from clear.