The trustee is in a position to decide on the fate of the license agreement by exercising the right to choose whether ongoing contractual relationships should continue to be fulfilled by both of the parties or terminated.
If the trustee opts for the continuation of the license agreement, the agreement will remain valid and enforceable under the same terms and conditions.
If the trustee decides to terminate the license agreement, the contracting party will be entitled to seek damages for the loss incurred because of the termination. However, the claim for damages does not benefit from any priority and has to be filed in the insolvency proceedings.The trustee has the right to terminate the license agreement. In this case, both parties will be released from their obligations.
As indicated above, if the trustee opts for the continuation of the license agreement, the trustee, as the contracting party, will be obliged to perform the obligations stemming from the agreement, under the same terms and conditions as applicable prior to the opening of the insolvency proceedings.At the moment, neither legislation nor case law provides a watertight solution for the licensee to protect its rights to use the licensed IPR against the insolvency of the licensor. However, different contractual provisions could be included in the license agreement, such as the grant of a usufruct to the licensee, a promise to sell the licensed IPR or a right of first refusal. The effectiveness of such provisions and their wording should be checked in each individual case.
For software, escrow provisions are recommended in order to preserve access to the source code.
In any case, the potential insolvency of the licensor should be addressed in the license agreement.