The U.S. Court of Appeals for the Third Circuit’s recent ruling in the case of In re: Mallinckrodt PLC showcases key benefits of intellectual property licenses in bankruptcy proceedings. In its April decision, the court held that Mallinckrodt could discharge its obligation to pay future royalties to Sanofi-Aventis US LLC. Notably, Sanofi-Aventis had sold the rights to a drug for an upfront payment of $100,000 and a promise of a one percent royalty on all net sales exceeding $10 million per year.
This ruling emphasizes the advantages of structuring transactions as nonexclusive licenses for intellectual property developers. By doing so, companies may protect themselves from future financial uncertainties should they face bankruptcy. The decision is seen as a significant development for both bankruptcy law and intellectual property transactions.
For a more detailed analysis, you can read the original article by Gregory Hesse and Kaleb Bailey at Hunton on Law360.