Insolvency law is a necessary evil in any developed legal system. Despite their best intentions, corporations become insolvent and need a way to reorganize or liquidate in the most efficient way possible. To properly achieve an efficient reorganization or liquidation, insolvency law must deal with all the assets and liabilities of the debtor. This implicates a broad range of legal and policy areas. One such area is intellectual property law. Insolvency law's goal to rehabilitate the debtor conflicts with intellectual property law's goals of freedom of alienability and exclusivity. Unfortunately, the insolvency law in many countries has not appropriately addressed this conflict. In cross-border insolvency cases, the problem is especially acute because different legal systems conflict on the treatment of IP licenses. A recent U.S. case, Jaffe v. Samsung Electronics Co., exemplifies the legal conflict that exists without a harmonized law on IP license treatment in cross-border insolvency proceedings. It should serve as a lesson and impetus for private international law efforts on this issue. As a first step towards harmonizing the law on IP license treatment in cross-border insolvency proceedings, this Note reviews the domestic approach in several countries. This review shows that the legal landscape for IP licensors and licensees is complicated and uncertain. As a remedy for this uncertainty, this Note proposes two solutions for the United Nations Commission on International Trade Law to adopt: (1) A statement of principles to guide states as they attempt to modernize their treatment of IP licenses in insolvency proceedings; and (2) a model law on the treatment of IP licenses in cross-border insolvency proceedings that is patterned on 11 U.S.C. § 365(n) of the U.S. Bankruptcy Code.
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