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USCA1 Opinion

UNITED STATES COURT OF APPEALS


FOR THE FIRST CIRCUIT

No. 96-2028

INSTITUT PASTEUR AND PASTEUR SANOFI DIAGNOSTICS,

Appellants,

v.

CAMBRIDGE BIOTECH CORPORATION,

Appellee.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Nathaniel M. Gorton, U.S. District Judge]


___________________

____________________

Before

Cyr, Boudin and Lynch,

Circuit Judges.
______________

____________________

Jeffrey D. Sternklar, with


_____________________

whom Michael Gottfried and


__________________

Burn
____

Levinson LLP were on brief for appellants.


____________
Joseph F. Ryan,
_______________
Andrew P. Strehle and
__________________
brief for appellee.

with whom

Jeffrey L. Jonas, Anthony L. Gr


_________________ ______________

Brown, Rudnick, Freed & Gesmer, P.C.


_____________________________________

were

____________________

January 17, 1997


____________________

CYR, Circuit Judge.

Unsuccessful in their intermedi-

CYR, Circuit Judge.


_____________

ate appeal

to the district

court, Institut Pasteur

Sanofi Diagnostics [collectively:

and Pasteur

"Pasteur"] again appeal

from

the bankruptcy court order which confirmed the chapter 11 reorga-

nization plan ("Plan") proposed by debtor-in-possession Cambridge

Biotech

Corporation

utilize

Pasteur

present dispute

("CBC"),

patents.

the

The

holder of

Plan provision

two

licenses

central

to

to the

calls for the sale of all CBC stock to a subsid-

iary of bioMerieux Vitek, Inc. ("bioMerieux"), a major competitor

of appellant Pasteur.

Finding no error, we affirm.

I
I

BACKGROUND
BACKGROUND
__________

CBC

manufactures and sells retroviral diagnostic tests

for detecting the human

with

AIDS.

Its

approximately

HIV

$14

immunodeficiency virus (HIV)

diagnostics

million in

division annually

revenues.

nonprofit French foundation engaged in

Type 2

holds

the

("HIV2 procedures").

exclusive

right

to

generates

Institut Pasteur,

AIDS-related research and

development, owns various patented procedures for

Virus

associated

Pasteur

use

and

diagnosing HIV

Sanofi Diagnostics

sublicense

Institut

Pasteur's patents.

In October

cross-license

perpetual

1989, CBC

and Pasteur entered

agreements, whereby

license to

licensed by the other.

incorporate Pasteur's

use

some of

each acquired

the

into mutual

a nonexclusive

technology patented

Specifically, CBC acquired the

HIV2 procedures into

or

right to

any diagnostic

kits

sold

by CBC in the United States, Canada, Mexico, Australia, New

Zealand and elsewhere.1

Each cross-license broadly

assigning

License, at

other

or sublicensing

prohibits the licensee from

to others.

See
___

Royalty-Free Cross-

7.1; Royalty-Bearing Cross-License, at

person shall acquire or have

8.1 ("[N]o

any right under or by virtue

of this Agreement.").

Nevertheless, either

Pasteur or CBC

was

authorized to "extend to its Affiliated Companies the benefits of

this Agreement so

regard

that such party shall

remain responsible with

[to] all [license] obligations."

Company"

is defined

controlled

as "an

by a party or

Id.
___

1.4.

organization which

an organization which

"Affiliated

controls or

is

is under common

control with a party." Id.


___

CBC

filed its chapter 11 petition on July 7, 1994, and

thereafter continued to operate its retroviral diagnostic testing

business

reorganization

plan

proposed that CBC assume both cross-licenses, see 11 U.S.C.


___

365

(executory

diagnostics

as

debtor-in-possession.

contracts),2

division

continue

Its

to

operate

utilizing Pasteur's

its

patented

retroviral

HIV2 proce-

dures, and sell

giant

French

all CBC stock

biotechnology

to a subsidiary of

corporation

and

bioMerieux, a

Pasteur's

direct

____________________

1These cross-licenses expressly


law governs
cense, at

2The
contracts,"
parties.

their interpretation.

provide that

See Royalty-Free
___

9; Royalty-Bearing Cross-License, at

parties agree that


since substantial

Massachusetts

the cross-licenses
performance remains

Cross-Li-

10.

are "executory
due by

both

See Summit Inv. & Dev. Corp. v. Leroux (In re Leroux),


___ ________________________
______ ____________

69 F.3d 608, 610 n.3 (1st Cir. 1995).

competitor in international biotechnology

sales.

Pasteur previ-

ously had licensed bioMerieux to use its HIV2 procedures, but the

earlier

license

related to

bioMerieux (i.e., bioMerieux's


____

system),

the United

and applied only to

States, Canada,

single

product manufactured

VIDAS automated immunoassay

VIDAS sales in

by

test

markets other than


_____ ____

Mexico, Australia, and

New Zealand,

markets expressly encompassed within the CBC cross-licenses.

Not surprisingly, in due course Pasteur objected to the

Plan.

Citing

contended

amounted

Bankruptcy Code

that the

to CBC's

365(c), 11 U.S.C.

proposed sale of

assumption of

CBC's stock

the patent

365(c), it

to bioMerieux

cross-licenses and

their

de facto "assignment" to a third party in contravention of


__ _____

the presumption

of

nonassignability

common law of patents, as

provision

contained in

Pasteur's licensing

have

granted

ordained

by

well as the explicit

the cross-licenses.

director,

the

nonassignability

Isabelle

attested that Pasteur

its competitor,

bioMerieux,

federal

or

Bressac,

would not

a subsidiary,

patent license under the terms allowed CBC.

The

bankruptcy

cross-licenses

over

proposed sale of

facto
_____

court

authorized

Pasteur's objection.

CBC

It

to

assume the

ruled that

the

CBC stock to bioMerieux did not constitute a de


__

"assignment"

of

merely

an assumption

debtor

under new

the cross-licenses

of the

to

cross-licenses by

ownership, and

bioMerieux,

but

the reorganized

that Bankruptcy Code

365(c)

enabled CBC to assume the cross-licenses

because

the prepetition

as debtor-in-possession

licensing relationship

between Pasteur

and CBC was neither "unique" nor "something in the category of

personal services contract."

In re Cambridge Biotech Corp., No.


______________________________

94-43054, slip op. at 17-18, 24 (Bankr. D. Mass. Sept. 18, 1996);

Tr.

176-77.3

The district

court upheld

the

bankruptcy court

ruling on intermediate appeal.

II
II

DISCUSSION
DISCUSSION
__________

A.
A.

Appellate Jurisdiction
Appellate Jurisdiction
______________________

Citing

our decision

in

Rochman
_______

v. Northeast Utils.
_________________

Serv. Group (In re Public Serv. Co. of N.H.), 963 F.2d 469 (1st
____________ _______________________________

Cir.) ("Public Service"), cert. denied,


______________
_____ ______

now moves to dismiss

tion.

remedies

506 U.S. 908 (1992), CBC

the appeal for lack of

It contends that

for preserving

order pending appeal after

appellate jurisdic-

Pasteur failed to

pursue all available

of the

temporary stay

confirmation

this court lifted the temporary

stay

on October 9,

1996.4

See
___

Trone v. Roberts Farms, Inc. (In re


_____
____________________ ______

Roberts Farms, Inc.), 652


___________________

that appellant should

F.2d 793, 798 (9th Cir.

file motion to stay

1981) (noting

judgment with Circuit

____________________

3The bankruptcy court


proposed

further found that the

in good faith, see 11 U.S.C.


___

Plan had been

1129(a)(3), and that the

stock sale to bioMerieux had been negotiated in good faith and at


arm's

length.

In re Cambridge Biotech Corp., No. 94-43054, slip


_____________________________

op. at 7, 12.

4A series of stays had


Plan

by August 2, 1996,

date was set


this

prevented CBC from consummating

as scheduled, and

for October 31, 1996.

court to

vacate the

clients

employees had quit

a final consummation

early October, CBC asked

pending stay,

delay threatened irreparable injury.


half its

In

the

claiming that

further

It represented that almost

during the preceding

year, jittery

had begun to cancel contracts, and that its revenues had

declined by 10%.

Justice if

necessary).

Since CBC

substantially consummated its


___________

Plan on October 21, 1996, it argues that Pasteur can no longer be

afforded

complete

bankruptcy

court has

affected by, and

consummated

relief because

Plan.

neither

jurisdiction over

much of

this

the many

the res distributed


___

court nor

the

third parties

pursuant to,

the

Finally, CBC argues, no court can now provide

Pasteur with meaningful partial relief, such as selective rescis-

sion of the stock sale or the cross-license assumption/assignment

provisions, because

retention of these cross-licenses

by CBC is

indispensable to any successful reorganization

of its retroviral

diagnostics business,

standpoint, is

and,

"deal-busting" component

("[P]rovisions of

of

to

CBC's

plan

See
___

Plan

IX.B.2.a

are nonseverable

our

and

Public Service
_______________

to the simplistic theme

dissolution) of

consummation

Order

suggestion,

invariably are deprived

premature

Plan.

We disagree.

decision does not reduce

courts

the

the Confirmation

mutually dependent.").

Contrary

from bioMerieux's

prior to

that appellate

of jurisdiction by

a stay

final

which results

disposition

the lack (or

in substantial

of the

appeal.

Rather, we rested our decision in Public Service primarily on two

______________

circumstantial considerations.

413, 418 (7th

Cir. 1992)

See
___

In re Andreuccetti, 975 F.2d


__________________

(noting that

Public Service
______________

contem-

plates that "'[t]he court should reach a determination upon close

consideration

of the relief sought in light

of the facts of the

particular case'") (citation omitted).

First, the equities weighed heavily against the

appel-

lants in

Public Service, who repeatedly


______________

and inexplicably failed

to avail themselves of interlocutory appeals from earlier denials

of their requests for stay by the courts below.

of their notable

lack of

elapsed from the date

diligence, a full

F.2d at 472.

stay throughout

sixteen months

had

of confirmation, during which "implementa-

tion of the confirmed plan proceeded apace."

963

As a consequence

In re Public Serv.,
__________________

In contrast, Pasteur assiduously preserved its

the three-month

confirmation, and, on the day

period which

elapsed following

this court dissolved the temporary

stay, we expedited the Pasteur appeal.

Second, Public Service involved


______________

cate Plan

provisions, as well

extraordinarily intri-

as a multi-billion

dollar enter-

prise,

with

following

the

the

result

that any

substantial

would have produced "'a

court on remand.'"

Id.
___

attempted

and unexcused

Plan

lapses

dismantling

by appellants

nightmarish situation for the bankruptcy

at 474 (citation

omitted); see,
___

e.g.,
____

Baker & Drake, Inc. v. Public Serv. Comm'n of Nev., 35 F.3d 1348,
___________________
___________________________

1351-52 (9th

noting that

Cir.

1994) (finding

reorganization plan

billion-dollar affair"

vice).
____

ties,

Although

appellate

at

like the plans

the CBC Plan is

issue was

jurisdiction,

"not a

in Trone and
_____

not without its

and

complex,

Public Ser___________

own complexi-

CBC is a much less complex enterprise than Public Service,

and its Plan was substantially consummated much

relation to the date of appeal.5

more recently in

____________________

5The

equitable

Service are
_______

and

symbiotic.

pragmatic

tests

employed

See In re UNR Indus., 20


___ _________________

in

Public
______

F.3d 766, 769

(7th Cir.), cert. denied, 115 S. Ct. 509 (1994) ("There


_____ ______

is a big

We need not resolve

the jurisdictional challenge urged

upon us by CBC, however, since the merits of Pasteur's contention

that CBC's assumption of

the cross-licenses and

its sale of

stock to

365(c)

Assocs.
_______

the bioMerieux subsidiary contravene

are readily dispatched.

(In re DN Assocs.), 3
__________________

Bankruptcy Code

See Casco N. Bank. N.A. v. DN


___ ___________________
__

F.3d 512,

515 (1st

Cir. 1993)

(noting that

appellate court may bypass jurisdictional questions

where appeal

would falter on merits

even assuming jurisdiction)

(citing Norton v. Mathews, 427 U.S. 524, 532 (1976)).


______
_______

B.
B.

The Merits6
The Merits
__________

Pasteur argues

assignment of

Bankruptcy Code

that the

CBC Plan

its two cross-licenses to

effects a

bioMerieux, contrary to

365(c)(1) which provides as follows:

The trustee

[viz., CBC]7
____

may not assume

or

assign any executory contract . . . , whether


or not such contract

de facto
__ _____

. . . prohibits or

re-

stricts assignment of rights or delegation of


duties, if

(1)(A) applicable law excuses


other than the debtor[]
to

such contract .

a party[]

[viz., Pasteur]
____

. .

from accepting

____________________

difference between inability to alter the outcome (real mootness)


and unwillingness to
and "[u]sing one

alter the outcome

word for two

different concepts breeds

sion"; instead, appellate courts


is

prudent

to upset

('equitable mootness'),"

confu-

ultimately must ask "whether it

the plan

of

reorganization at

this late

date.") (citations omitted).

6We review the district court's

conclusions of law de
__

novo
____

and the bankruptcy court's findings of fact for clear error only.
See Petit v. Fessenden, 80 F.3d 29, 32 (1st Cir. 1996).
___ _____
_________

7As

debtor-in-possession,

CBC has

substantially

the same

rights and powers as a chapter 11 trustee, including the power to


assume executory contracts under
U.S.C.

Bankruptcy Code

1107.

365.

See 11
___

performance

from

or rendering

perfor-

mance to an entity other than the debtor


or the debtor in possession,

whether or

not such contract . . . prohibits or restricts assumption or assignment; and

(B)

such party [viz., Pasteur] does not


___

consent to such assumption or assignment


. . . .

11 U.S.C.

365(c)(1).

Pasteur

argues that

in

order

to

encourage

optimum

product

innovation the

federal common

that patent licensees, such

parties absent

rule of

"applicable

the patent holder's consent.

365(c)(1)(A),

accept

within

which precludes

performance

from

bioMerieux's subsidiary

assuming

Inc.
____

the

or assigning
__

meaning

This federal common

thus qualifies

of

Pasteur from

any entity

other

Bankruptcy

being

than

as an

Code

compelled to

CBC

e.g.,
____

and therefore prevents CBC from either


______

these cross-licenses.

v. Cadtrak Corp. (In re CFLC, Inc.), 89


______________ _________________

(9th Cir. 1996) (federal

to third

See, e.g., Commis___ ____ _______

(1948).

presumptive nonassignability

law,"

patents presumes

as CBC, may not sublicense

sioner v. Sunnen, 333 U.S. 591, 609


______
______

law

law of

See
___

Everex Sys.,
____________

F.3d 673, 679-80

patent law of nonassignability preempts

state law

relating to

patent license assignability).

says Pasteur,

even assuming that

debtor simply

to assume the cross-licenses

assignment
__________

to a third

section 365(c)

party, CBC formally


________

Further,

might allow

without a subsequent
_______ _ __________

structured this Plan

transaction as an assumption by the debtor-in-possession, whereas

in
__

substance
_________

bioMerieux, a

it

was an

assignment

complete stranger to

of

the cross-licenses

to

the original cross-licensing

agreements.

These

contentions are

Summit Inv. & Dev. Corp. v.


_________________________

(1st

Cir.

Bankruptcy

1995),8

which

Code subsections

legislative history.9

urged

to

debtor

it

test."

analyzed

and

365(c) and

interpreted

in

69 F.3d 608

companion

(e) and

their relevant

As in the present case, in

Leroux we were
______

Under such

365(c) and

an

(e) as

approach, the

mandating a

chapter 11

would lose its option to assume the contract, even though


______

never intended to assign

either

our decision

Leroux (In re Leroux),


______ ____________

interpret subsections

"hypothetical

foreclosed by

the

particular

the contract to

executory

contract

another entity, if

or

the

applicable

nonbankruptcy law

cally

purported to terminate

upon the filing of the chapter

its assignment to an

the contract automati-

11 petition or to preclude

entity not a party to the contract.

Id. at
___

612.

We rejected

holding

the proposed hypothetical test

instead that

case-by-case inquiry

subsections 365(c)

into

whether the

and (e)

nondebtor

in Leroux,
______

contemplate a

party

(viz.,
____

____________________

8See
___
Cir.) ("In
for

Williams v. Ashland Eng'g Co., 45 F.3d


________
__________________
a multi-panel circuit, newly

the most

part, bound

by prior

588, 592 (1st

constituted panels are,

panel decisions

closely on

point."), cert. denied, 116 S. Ct. 51 (1995).


_____ ______

9Bankruptcy Code
contractual termination

365(e)(2)(A) provides that a statutory or


provision, which is

contingent upon the

filing of a bankruptcy petition, may be enforceable in bankruptcy

if the "applicable law excuses a party, other than the debtor, to

such contract or lease from accepting performance from or render-

ing performance to the trustee or to an assignee of such contract


__ ___ _______ __ __ __ ________
or

lease, whether

or not

such contract

or lease

prohibits or

restricts assignment of rights or delegation of duties;

and (ii)

such

party does not consent to such assumption or assignment . .

. ."

11 U.S.C.

365(e)(2)(A) (emphasis added).

10

Pasteur) actually
________

was being "forced to

its executory contract

accept performance under

from someone other than

the debtor party

with whom it originally

transaction

and

contracted."

continue to perform

under an executory

cannot simply presume

debtor-in-possession is a legal

prepetition

debtor with

Pasteur) contracted.

96th

Cong.,

2d

Id.
___

Sess.

Bildisco, 465 U.S. 513,


________

rights of

court

the

Where

the particular

envisions that the debtor-in-possession would assume

ruptcy court

the

Id.
___

contract, the bank-

as a matter of

law that the

entity materially distinct


__________

whom

the

nondebtor party

at 613-14 (citing H.R. Rep.

27(b)

(1980);

528 (1984)).

NLRB
____

v.

from

(viz.,
____

No. 1195,

Bildisco &
__________

Rather, "sensitive

to the

the nondebtor

party (viz., Pasteur),"


____

the bankruptcy

must focus on the

performance actually to

be rendered by

debtor-in-possession

with

view

to

ensuring

that

the

nondebtor party (viz., Pasteur) will receive "the full benefit of


___

[its] bargain."

Cong., 2d Sess.

Id.
___

at 612-13

(citing S.

Rep. No.

59 (1978), reprinted in 1980


_________ __

989, 95th

U.S.C.C.A.N. 5787,

5845).

Given the pragmatic

in Leroux, the ultimate


______

made by

"actual performance" test

findings of fact and conclusions

the bankruptcy court10

CBC simply does

CFLC, Inc.,
___________

not occupy the

89 F.3d

673 (9th

adopted

of law

below did not

constitute error.

same position

as the debtor

Cir.

1996), upon

in

which Pasteur

____________________

10We

are not

persuaded

failure to cite Leroux


______

contention that

in the confirmation order

the bankruptcy court failed


Leroux
______

by Pasteur's

to follow it.

Pasteur

the

indicates that

itself cited

at the July 1996 confirmation hearing, and the bankruptcy

court's ultimate findings faithfully track its model.

11

relies most heavily.

ed for an outright

an entirely

The Plan in CFLC, Inc. unmistakably provid__________

assignment of the debtor's patent


__________

different corporation

Cadtrak Corporation had

with which the

never contracted.

contrast, CBC all along has conducted, and

Id. at
___

license to

patent holder

679-80.

By

proposes to continue,

its retroviral diagnostic enterprise as the same corporate entity

which

functioned prepetition,

while

utilizing

Pasteur's

HIV2

procedures in that same prepetition endeavor.

Pasteur nonetheless insists that the reorganized CBC is

different than

the prepetition

chapter 11 filing

legal entity

but because

than before

CBC shareholder.

entity,

it is

namely,

not due

now owned
_____

merely to

by a
__

its

different

bioMerieux's subsidiary qua


___

Pasteur's contention finds no support, however,

either in Massachusetts law, see


___

supra note 1, or in the


_____

cross-

license provisions it negotiated.

Stock sales are not

ownership of

the

mergers whereby outright title and

licensee-corporation's assets

(including

patent licenses) pass to the acquiring corporation.

its

Rather, as a

corporation, CBC "is a legal entity distinct from its

ers." Seagram Distillers Co.


________________________

Comm'n, 519 N.E.2d


______

276, 281

v.

Alcoholic Beverages Control


_____________________________

(Mass. 1988) (citing

Fletcher, Cyclopedia of Corporations

Absent compelling

grounds for

therefore, CBC's

separate legal

the

sharehold-

6 William

M.

2456 (1979 & Supp. 1986)).

disregarding its

corporate form,

identity, and its

ownership of

patent cross-licenses, survive without interruption notwith-

standing repeated and even drastic changes in its ownership.

12

See
___

id.
___

(holding that

does

not

alter

corporation's

Indus.
______

corporation's sale of

its identity,

executory

nor

contracts or

all its

effect

capital stock

transfer of

licenses);

see
___

the

also PPG
____ ___

v. Guardian Indus. Corp., 597 F.2d 1090, 1096 (6th Cir.),


_____________________

cert. denied, 444 U.S. 930 (1979) (same; distinguishing mere sale
_____ ______

of

stock from a transfer of

merger wherein

patent license as part of corporate

merging licensee

ends its corporate

existence).

Pasteur cites no apposite authority to the contrary.

Furthermore, Pasteur's position finds no support in the

negotiated

terms of its cross-licenses.

and given

CBC's corporate

law, supra
_____

form and the

governing Massachusetts

Pasteur was free to negotiate restrictions on CBC's

continuing rights

its

As the patent holder

under the

stock ownership

or

cross-licenses based on

corporate control.

changes in

See id.
___ ___

at

1095

(parties may override law of merger by negotiating express patent

license

provision); see
___

Nevertheless,

limiting

these cross-licenses

or terminating

ownership

also Seagram,
____ _______

were to

CBC's

change hands.

519 N.E.2d

contain no

rights in

The

the

at 280-81.11

provision either

event its

stock

generic nonassignability

provisions found in these cross-licenses, see, e.g., Royalty-Free


___ ____

Cross-License,

solely

for

at

7.1 ("This

the benefit

of the

Agreement .

parties

. . has

been made

hereto" and

"no other

person shall acquire or have any right under or by virtue of this


____________________

11Notwithstanding Pasteur's reliance on the important policy


goals animating the federal
innovation

common law of patents,

theme promoted under patent law

dated by allowing patent

the product-

may well be accommo-

holders to control sublicensing through


_______

negotiated contract restrictions.


__________ ________ ____________

13

Agreement."), plainly

do not address the

circumstance presented

here.

Rather, these nonassignability provisions

essential question, which is whether

virtue

of its acquisition of

under the cross-licenses.

own

rights under

the

simply beg the

bioMerieux's subsidiary, by

CBC stock, terminated CBC's rights


___

Interpreted as Pasteur proposes, CBC's

cross-licenses would

terminate with

any
___

change in the identity of any CBC stockholder.

Other

cross-license

provisions

Pasteur's interpretation as well.

Archbishop of Boston,
____________________

that a contract

licenses

with

any

must be interpreted as

"affiliated company,"

undercut

See Willitts v. Roman Catholic


___ ________
______________

581 N.E.2d 475,

explicitly authorize

directly

CBC to

which

478 (Mass. 1991)

a whole).

share its

on

These

(noting

cross-

license rights

its face

presumably

encompasses a parent corporation such as bioMerieux's subsidiary.

Cross-Licenses, at

organization

1.4

which controls

which is under common

I.

Yet

(defining "Affiliated Company"

. .

. a

party or

an organization

control with a party"); see


___

more importantly,

CBC insisted upon

supra Section
_____

a provision

would afford it the unilateral right to terminate any

Pasteur

might extend

to a

company called

control of Genetic Systems shall .

indirectly, by

any

company not having

struction,

otherwise."
_________

added);

person

amalgamation,

see PPG Indus., 597


___ ___________

sublicense

Genetic Systems

of

connected

at the date

acquisition
___________

Royalty-Free

which

. . be acquired, directly

or group

such control

as "an

of
__

Cross-license,

F.2d at

persons

hereof, by

shares or
______

at

2.3

1096 (noting

"if

or

or

recon-

assets

or
__

(emphasis

that patent

14

holder's express reservation of

tion

in

reserve

two patent

condition

in

change-of-stock-ownership condi-

licenses

suggested

its intention

nine

other patent

licenses);

not

see
___

to

also
____

Plumbers & Steamfitters Local 150 v. Vertex Constr. Co., 932 F.2d
_________________________________
__________________

1443, 1449 (11th Cir. 1991)

("[T]he doctrine of expressio


_________

unius
_____

est
___

exclusio alterius
________ ________

instructs that

when certain

matters are

mentioned in a contract, other similar matters not mentioned were

intended

to be

persuade

us

excluded.").

that Pasteur

Taken together,

foresaw,

or

these provisions

reasonably should

have

foreseen, that CBC might undergo changes of stock ownership which

would

not alter

chose

not to

its corporate

condition

legal identity,

the continued

but nonetheless

viability of

its cross-

licenses accordingly.12
____________________

12Lastly, Pasteur

misplaces

reliance upon

In re Alltech
_______________

Plastics, Inc., 5 U.S.P.Q.2d 1806 (Bankr. W.D. Tenn. 1987), where


______________
it

was held that section

acquired the corporate

365(c) precluded an

debtor's stock pursuant

reorganization plan, from exercising


prepetition
original

patent license.

discontinued

to a chapter

11

the debtor's rights under a

Following the

chapter 11 reorganization case

tion, Alltech

entity, which had

conversion of

its

to a chapter 7 liquida-

all operations

and

discharged

its

employees.

Before the debtor once again converted to chapter 11,

its trustee

liquidated virtually all its assets,

patent license.
sive,

Noting

that plan confirmation is a

equity-based inquiry,

characterized the sale of

id. at
___

1813, the

fact-inten-

bankruptcy court

Alltech's stock to Fluoropak Container

Corporation as a de facto assignment


__ _____
noncontracting party.

except for its

of the patent license to

It so held because unlike CBC, Alltech had


______ ___

ceased to exist except as a "shell."

Id. at 1807 & 1810 (noting


___

that "shell" emerging after Alltech's chapter 7 conversion "is in


reality

a different entity

bankruptcy

court

than the prepetition

specifically

innovative rebirth of

observed

a corporate

that

shell is not

Debtor").
the

The

"attempted

analogous to

sale of stock by an active corporation," id. at 1810-11, and that


___
"the present case is distinguished from

one where the reorganiz-

ing debtor, operating continuously and in good standing


licensor,
party],"

seeks to

approve the

id. at 1812.
___

sale of its

The bankruptcy court

15

stock [to

with its

a third

further noted that

III
III

CONCLUSION
CONCLUSION
__________

As

CBC

remains in

all

material

respects the

legal

entity with which Pasteur freely contracted, Pasteur has not made

the required individualized

showing that

it is or

will be

de-

prived of "the full benefit of [its] bargain," Leroux, 69 F.3d at


______

612-13, under the ruling challenged on

appeal.

Accordingly, the
___

district court judgment is affirmed and costs are awarded to


_________________________________________________________________

appellee.
________

So ordered.
So ordered.
__________

____________________

the lack of demonstrated

expertise on the part of

utilizing

process to

the

patented

containers, likewise

posed a

manufacture

Fluoropak, in

toxic-material

serious public safety

risk.

These distinguishing circumstances make Alltech inapposite.


_______

16

Id.
___