The authors are attorneys at Baker & McKenzie’s New York office. Grant Hanessian, a partner, chairs the firm’s Litigation Department in New York. He is the co-author of two books, Gulf War Claims Reporter and International Arbitration Checklists.
Joseph Samet, also a partner, co-chairs the firm’s North American Financial Restructuring, Creditors’ Rights and Bankruptcy Practice Group. In addition, he chairs the Creditors’ Rights/Bankruptcy Practice in New York. Mr. Samet is a contributing author for Collier on Bankruptcy and the Collier Bankruptcy Practice Guide. He also coauthors Herzog’s Bankruptcy Forms and Practice.
Michael A. Stoker, an associate at the firm, specializes in international arbitration and intellectual property disputes.
The decline of some technology businesses, and the widespread use of arbitration clauses in technology license agreements— particularly between parties in different countries—has required many licensees of “intellectual property”1 to focus on whether they retain their license and arbitration rights if a licensor files for bankruptcy relief in the United States. This article examines the interplay between arbitration and bankruptcy law with respect to certain intellectual property rights, and explores options available to a licensee engaged in an arbitrable dispute with a licensor that is, or may soon be, insolvent.
Arbitration and Bankruptcy
Many intellectual property agreements contain arbitration clauses. Particularly in international transactions, arbitration is widely viewed as a more efficient and equitable process than litigation in many national courts. A bankruptcy filing in the United States automatically stays substantially all actions, including pending arbitration proceedings, against the debtor. Creditors may not continue to pursue such actions unless a bankruptcy court terminates or modifies the automatic stay.