The Future Of The SAAB Trademarks: Trademarks In Bankruptcy

With the announcement today that the Swedish automaker Saab has filed for bankruptcy, we thought it timely to take a look at what happens to trademarks in the context of a bankruptcy proceeding. SAAB is the owner of nearly 100 U.S. trademark registrations (for SAAB, ECOPOWER, BIOHYBRID, 9-3, among others). Since trademarks are often one of the most valuable assets a company may own, their disposition in a bankruptcy proceeding is of paramount importance. So, what is to become of the SAAB trademarks?

The Lanham Act does not discuss the issue of bankruptcy. Trademarks are also excluded from specific mention in the U.S. Bankruptcy Code. But there is no question that trademarks, and trademark licenses and related agreements, are considered property of a bankrupt estate subject to the control and jurisdiction of the bankruptcy court.

Saab's filing of a bankruptcy petition does not automatically result in abandonment of its rights in its marks. A trustee or a debtor-in-possession should protect such marks from abandonment or loss of value by continuing to use them or through their sale. If all of Saab's assets are sold intact to a single purchaser, the trademarks will be included in such a sale. In that case, all of the assets and the goodwill of the company, including the trademarks, move together. It is not uncommon, however, for a debtor's assets to be sold piecemeal. This is when difficulties may arise. Under trademark law, the sale or assignment of a trademark is not valid unless it includes the goodwill of the business with which the mark is used. Thus, in the context of a bankruptcy case, it is necessary that a sufficient portion of the business be sold with the trademark in order to ensure that the requisite goodwill has passed with the sale. There is no standard for what is "enough," and often the purchasing party will acquire and rely only...