Dr. Michael Jaffe v. Samsung Electronics Co., No. 12-1802 (4th Cir. 2013)
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Qimonda, a German corporation that manufactured semiconductor devices, filed for insolvency in Munich, Germany. Plaintiff, the insolvency administratort, filed an application in the United States Bankruptcy Court under Chapter 15 of the Bankruptcy Code, petitioning the U.S. court to recognize the German insolvency proceeding as a "foreign main proceeding" in order to obtain privileges available under Chapter 15. At issue before the court was how to mediate between the United States' interests in recognizing and cooperating with the foreign insolvency proceeding and its interests in protecting creditors of Qimonda with respect to U.S. assets, as provided by 11 U.S.C. 1521 and 1522. The court concluded that the bankruptcy court properly recognized that plaintiff's request for discretionary relief under section 1521(a) required it to consider the interest of the creditors and other interested parties, including the debtor under section 1522(a) and that it properly construed section 1522(a) as requiring the application of a balancing test. The court also concluded that the bankruptcy court reasonably exercised its discretion in balancing the interest of the licensees against the interests of the debtor and finding that application of 11 U.S.C. 365(n) was necessary to ensure the licensees under Qimonda's U.S. patents were sufficiently protected. Accordingly, the court affirmed the judgment of the district court.
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PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-1802 MICHAEL JAFFà , Insolvency Administrator, Plaintiff - Appellant, v. SAMSUNG ELECTRONICS COMPANY, LIMITED; INFINEON TECHNOLOGIES AG; INTERNATIONAL BUSINESS MACHINES CORPORATION; HYNIX SEMICONDUCTOR, INC.; INTEL CORPORATION; NANYA TECHNOLOGY CORPORATION; MICRON TECHNOLOGY, Defendants - Appellees. -----------------------------UNITED STATES OF AMERICA, Amicus Curiae, VERBAND INSOLVENZVERWALTER DEUTSCHLANDS E.V., Amicus Supporting Appellant, THE FEDERATION OF GERMAN INDUSTRIES, a/k/a Bundesverband der Deutschen Industrie; INTELLECTUAL PROPERTY OWNERS ASSOCIATION; SEMICONDUCTOR INDUSTRY ASSOCIATION; CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA; NATIONAL ASSOCIATION OF MANUFACTURERS; BUSINESS SOFTWARE ALLIANCE, Amici Supporting Appellees. Appeal from the United States Bankruptcy Court for the Eastern District of Virginia, at Alexandria. Stephen S. Mitchell, Bankruptcy Judge. (09-14766-RGM) Argued: September 17, 2013 Decided: December 3, 2013 Before NIEMEYER, WYNN, and FLOYD, Circuit Judges. Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Judge Floyd joined. Judge Wynn wrote a separate opinion concurring in Parts I, II, and III and the judgment. ARGUED: Jeffrey A. Lamken, MOLOLAMKEN LLP, Washington, D.C., for Appellant. William H. Pratt, KIRKLAND & ELLIS LLP, New York, New York, for Appellees. Mark R. Freeman, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Amicus Curiae the United States of America. ON BRIEF: Robert K. Kry, MOLOLAMKEN LLP, Washington, D.C., for Appellant. Jennifer M. Selendy, John P. Del Monaco, New York, New York, Timothy Muris, Daniel A. Bress, Washington, D.C., William E. Devitt, Dennis J. Abdelnour, KIRKLAND & ELLIS LLP, Chicago, Illinois; Stephen E. Leach, LEACH TRAVELL BRITT, P.C., Tysons Corner, Virginia, for Appellees Infineon Technologies AG, Samsung Electronics Company, Limited, and International Business Machines Corporation. Lawrence A. Katz, LEACH TRAVELL BRITT, P.C., Tysons Corner, Virginia; Theodore G. Brown, III, KILPATRICK TOWNSEND & STOCKTON LLP, Menlo Park, California, for Appellee Hynix Semiconductor, Inc. Joseph E. Mais, Timothy J. Franks, Phoenix, Arizona, John K. Roche, Washington, D.C., Alan D. Smith, PERKINS COIE LLP, Seattle, Washington, for Appellee Intel Corporation. Marc Palay, Geneva, Switzerland, Jonathan Cohn, SIDLEY AUSTIN LLP, Washington, D.C., for Appellee Nanya Technology Corporation. Maurice Horwitz, New York, New York, M. Jarrad Wright, Adam P. Strochak, Washington, D.C., Alfredo R. Perez, Houston, Texas, Jared Bobrow, WEIL, GOTSHAL & MANGES LLP, Redwood Shores, California, for Appellee Micron Technology. Christopher J. Wright, Timothy J. Simeone, WILTSHIRE & GRANNIS, LLP, Washington, D.C., for Amicus Verband Insolvenzverwalter Deutschlands E.V. Neil H. MacBride, United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia; Stuart F. Delery, Acting Assistant Attorney General, Robert M. Loeb, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Amicus Curiae the United States of America. Richard F. Phillips, Kevin H. Rhodes, INTELLECTUAL PROPERTY OWNERS ASSOCIATION, Washington, D.C.; Jeffrey K. Sherwood, Gary M. Hoffman, Megan S. Woodworth, DICKSTEIN SHAPIRO LLP, Washington, D.C., for Amicus Intellectual Property Owners 2 Association. Timothy J. Coleman, FRESHFIELDS BRUCKHAUS DERINGER LLP, Washington, D.C., for Amicus Federation of German Industries. David Isaacs, SEMICONDUCTOR INDUSTRY ASSOCIATION, Washington, D.C., for Amicus Semiconductor Industry Association; Paul D. Clement, D. Zachary Hudson, BANCROFT PLLC, Washington, D.C., for Amici Semiconductor Industry Association, Chamber of Commerce of the United States of America, National Association of Manufacturers, and Business Software Alliance; Robin S. Conrad, NATIONAL CHAMBER LITIGATION CENTER, Washington, D.C., for Amicus Chamber of Commerce of the United States of America; Quentin Riegel, NATIONAL ASSOCIATION OF MANUFACTURERS, Washington, D.C., for Amicus National Association of Manufacturers; Timothy A. Molino, BSA/THE SOFTWARE ALLIANCE, Washington, D.C., for Amicus Business Software Alliance. 3 NIEMEYER, Circuit Judge: This appeal presents the significant question under Chapter 15 of the U.S. Bankruptcy Code of how to mediate between the United States interests in recognizing and cooperating with a foreign insolvency proceeding and its interests in protecting creditors of the foreign debtor with respect to U.S. assets, as provided in 11 U.S.C. §§ 1521 and 1522. Qimonda AG, a German corporation that manufactured semiconductor devices and was, for a brief time, one of the world s largest manufacturers of dynamic random access memory ( DRAM ), filed for insolvency in Munich, Germany, in January 2009. The principal assets of Qimonda s estate consisted of some 10,000 patents, about 4,000 of which were U.S. patents. These patents Qimonda s industry were subject competitors, to avoid as to cross-license was common infringement risks in agreements the caused with semiconductor by the patent thicket resulting from the overlapping patent rights of some 420,000 patents in the semiconductor industry. Ancillary to the German insolvency proceeding, Dr. Michael Jaffé, the court, filed Eastern insolvency an District administrator application of Virginia in the under appointed by Bankruptcy Court Chapter 15 the of Munich for the the U.S. Bankruptcy Code, petitioning the U.S. court to recognize the German insolvency proceeding as a foreign main proceeding in 4 order to obtain an array of privileges available under Chapter 15. Among other relief, Jaffé specifically requested that the bankruptcy court entrust to him, pursuant to 11 U.S.C. § 1521(a)(5), the administration of all of Qimonda s assets within the territorial jurisdiction of the United States, which largely consisted of the 4,000 U.S. patents. Contemporaneously with the Chapter 15 proceeding, Jaffé sent letters to licensees of Qimonda s patents under its crosslicense agreements, declaring that, under § 103 of the German Insolvency Code, the licenses granted under Qimonda patents are no longer enforceable, including company s 4,000 U.S. patents. the licenses under the As Jaffé later indicated to the bankruptcy court, he intended to re-license Qimonda s patents for the benefit of Qimonda s creditors, replacing licenses paid for in-kind with cross-licenses with licenses paid for with cash through royalties. The bankruptcy court entered an order recognizing the German insolvency proceeding as a foreign main proceeding and a separate requested order under granting § Jaffé the 1521(a)(5). discretionary But, following relief a he four-day evidentiary hearing, it conditioned the § 1521 relief with the requirement that Jaffé afford the licensees of Qimonda s U.S. patents the treatment they would have received in the United States under 11 U.S.C. § 365(n), 5 which limits a trustee s ability to reject unilaterally licenses to the debtor s intellectual property by giving licensees the option to retain their rights under the licenses. After balancing the interests of Qimonda s estate with the interests of the licensees of its U.S. patents, the bankruptcy court concluded that the application of § 365(n) was necessary to ensure, as required by § 1522(a), that the licensees were sufficiently protected, even though it would adversely affect Qimonda s estate. The bankruptcy court also concluded, pursuant to 11 U.S.C. § 1506, that allowing Jaffé to cancel unilaterally Qimonda s licenses of U.S. patents would be manifestly contrary to the public policy of the United States, recognizing a fundamental U.S. public policy promoting technological innovation, which would be undermined if it failed to apply § 365(n) to the licenses under Qimonda s U.S. patents. In this direct appeal from the bankruptcy court, Jaffé challenges both of these conclusions, arguing that the court erred in its construction of Chapter 15 and abused its discretion in applying it. We conclude that the bankruptcy court properly recognized that Jaffé s request for discretionary relief under § 1521(a) required it to consider the interests of the creditors and other interested entities, including the debtor under § 1522(a) and that it properly construed 6 § 1522(a) as requiring the application of a balancing test. Moreover, relying on the particular facts of this case and the extensive record developed during the four-day evidentiary hearing, we also conclude that the bankruptcy court reasonably exercised its discretion in balancing the interests of the licensees against the interests of the debtor and finding that application of § 365(n) was necessary to ensure the licensees under Qimonda s U.S. patents were sufficiently protected. Accordingly, we affirm. I The German insolvency proceeding Qimonda AG filed an application to open a preliminary insolvency proceeding in the Munich Insolvency Court on January 23, 2009, which was converted to a final proceeding on April 1, 2009. Upon converting the proceeding to a final one, the court appointed Dr. Michael Jaffé to serve as the estate s insolvency administrator, a position akin to a bankruptcy trustee under U.S. law. Subsequently, Qimonda ceased all operations and began to liquidate its estate. assets of patents, the estate including consisted about 4,000 of U.S. its manufacturing The principal approximately patents. Most of 10,000 these patents covered products or processes related to DRAM, but some covered other types of semiconductor technology. 7 The patent thicket and the practice of cross-licensing At the time Qimonda opened its insolvency proceeding, its patents were subject to numerous cross-license agreements with other semiconductor Technologies Samsung AG (from Electronics Corporation manufacturers, ( IBM ), which Company, Qimonda Intel including had spun International Corporation, off Infineon Business in Hynix 2006), Machines Semiconductor, Inc., Nanya Technology Corporation, and Micron Technology, Inc. While some of these cross-license agreements were designed to facilitate specific joint ventures, most simply reflected the strategy widely response to adopted infringement in the risks semiconductor arising from industry the in industry s patent thicket -- a term used to describe a dense web of overlapping intellectual property rights. Carl Shapiro, Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting, in 1 Innovation Policy and the Economy 119, 120 (Adam B. Jaffe et al. eds., 2001). As the bankruptcy court in this case aptly explained and all parties agreed, there are so many patents implicated by any new semiconductor product that it would be all but impossible to design around each and every one. 2011). In re Qimonda AG, 462 B.R. 165, 175 (Bankr. E.D. Va. Indeed, such is the number of potentially applicable patents that it is not always possible to identify which ones might cover a new product . . . . 8 Id. The problem of the patent thicket is exacerbated by the enormous costs incurred to bring a new semiconductor product to market. According to one expert, the price of building a new semiconductor fabrication facility can now exceed $5 billion. These sunk costs could create a classic holdup problem if a new product were ultimately found to infringe someone else s patent, with the patent s owner being able to extract a substantially higher royalty after the investment had been made than if a license had been negotiated beforehand. avoid this holdup premium and enhance their Thus, to design freedom, competitors in the semiconductor industry have routinely entered into broad, non-exclusive other, sometimes with (either up-front payments account for differences cross-license the addition or the of so-called in respective patent portfolios. agreements size with equalizing running and each payments royalties) breadth of to the In re Qimonda AG, 462 B.R. at 175. Consistent with this industry practice, Qimonda had patent cross-license agreements with nearly every other major semiconductor manufacturer at the time it opened its insolvency proceeding. 9 The Chapter 15 proceeding Jaffé commenced this Chapter 15 proceeding on June 15, 2009, for recognition of the German insolvency proceeding as a foreign main proceeding under 11 U.S.C. § 1517. Jaffé s petition identified Qimonda s known assets in the United States as including its active patents and patent applications filed with the United States Patent and Trademark Office, and it sought relief designed to give effect to the German Proceedings in the U.S., protect the U.S. Assets, and to prevent creditors in the U.S. from taking German Proceedings. actions that [might] frustrate the Jaffé also sought an order entrusting to him, under § 1521(a)(5), [t]he administration or realization of all or part of the assets of [Qimonda] within the territorial jurisdiction of the United States and further declaring that the German Proceedings . . . be granted comity and [be] given full force and effect in the United States. The bankruptcy court granted the relief Jaffé requested, entering an order granting recognition of the German insolvency proceeding as a foreign main proceeding under § 1517. same time, grant[ing] it also further Supplemental representative Order of entered relief made Qimonda a under Jaffé AG in separate 11 the Supplemental U.S.C. the At the sole United § Order 1521. and States The exclusive and, as requested, specifically gave him the power to administer the 10 assets of Qimonda AG within the territorial jurisdiction of the United States. It authorized Jaffé to examine witnesses, take evidence, seek production of documents, and deliver information concerning Qimonda. Finally, it specified that, in addition to those sections [of the Bankruptcy Code] made applicable pursuant to § 1520, a number of other provisions of the Bankruptcy Code would be applicable in this proceeding, including 11 U.S.C. § 365. That provision gives a bankruptcy trustee power to assume or reject any of the debtor s executory contracts. subsection, unilaterally property, § 365(n), reject reserving limits licenses to the to the trustee s the licensees ability debtor s the But one option to intellectual to elect to retain their rights under the licenses. Shortly after the bankruptcy court entered its Supplemental Order, Jaffé began sending letters to companies that had crosslicense agreements with Qimonda, invoking § 103 of the German Insolvency Code and declaring that the licenses under Qimonda s patents were no longer enforceable. Section 103 of the German Insolvency Code, much like § 365 of the U.S. Bankruptcy Code, permits an insolvency continue to perform the administrator debtor s to decide executory whether contracts. to But, unlike § 365, which includes the § 365(n) exception, § 103 does not specifically address intellectual property licenses. In Jaffé s view, however, the licenses under Qimonda s patents fell 11 within the scope of § 103, and it was his duty, as insolvency administrator, not to recognize them since they provided no useful compensation to Qimonda s estate. After receiving these letters, Samsung and Elpida Memory, Inc., responded with letters, taking the position that 11 U.S.C. § 365(n) protected their licenses under Qimonda s U.S. patents and announcing that they were electing to retain their rights under the licenses. The letters from Samsung and Elpida prompted Jaffé to move to amend the bankruptcy court s July 22, 2009 Supplemental Order to delete entirely its reference to § 365. asked the court specifying that to add Section a proviso 365(n) to Alternatively, Jaffé the applies Supplemental only if the Order Foreign Representative rejects an executory contract pursuant to Section 365 (rather than simply exercising the rights granted to the Foreign Representative pursuant to the German Insolvency Code). Several companies that had licenses under Qimonda s U.S. patents through cross-license agreements -- namely, Infineon, Samsung, Micron, Nanya, IBM, Intel, and Hynix (hereafter, the Licensees ) -- opposed Jaffé s motion to amend the Supplemental Order. 1 1 Infineon, Samsung, Micron, Nanya, and Elpida originally objected to the motion, while IBM, Intel, and Hynix were later allowed to intervene as objectors. Elpida, which also had 12 By an opinion dated November 19, 2009, the bankruptcy court granted Jaffé s motion, stating that its inclusion of § 365 was improvident. The court explained that consistent with Chapter 15 s goal of providing a systematic and consistent resolution to cross-border insolvencies, the fate of the patent crosslicense agreements should be decided in the German insolvency proceeding amended by its applying German Supplemental Order law. The to court accordingly the alternative include proviso that Jaffé had requested as an amendment. The appeal to the district court and its remand order The Licensees appealed the bankruptcy court s amended order to the district court, which thereafter remanded the case back to the bankruptcy court to consider 11 U.S.C. § 1522(a) s requirement that the bankruptcy court ensure that the interests of the creditors and other interested entities, including the debtor, [were] explained that sufficiently § 1522(a) protected. required the The district bankruptcy court court to balance the relief granted to the foreign representative and the interests of those affected by such relief, favoring one group of creditors over another. without unduly In re Qimonda AG elected to enforce its licenses from Qimonda under § 365(n), subsequently reached a settlement with Jaffé and therefore is not an objecting Licensee. 13 Bankr. Litig., 433 B.R. 547, 557 (E.D. Va. 2010) (emphasis omitted) (quoting In re Tri-Cont l Exch. Ltd., 349 B.R. 627, 637 (Bankr. E.D. Cal. 2006)). The court found it unclear on [the] somewhat anemic record whether the Bankruptcy Court adequately balanced the parties interests, as required by § 1522, noting that the bankruptcy court had not adequately explained why the application of § 365(n) would unduly prejudice Jaffé or, conversely, fully considered whether cancellation of licenses for [Qimonda s U.S. patents] would put at risk [the Licensees ] investments in manufacturing or sales facilities in this country for products covered by the U.S. patents. Id. at 558. As a separate basis for remand, the district court also found that the bankruptcy court had failed to consider whether § 365(n) embodies the fundamental public policy of the United States, such that subordinating § 365(n) to German Insolvency Code § 103 is an action manifestly contrary to the policy of the United States, under 11 U.S.C. § 1506. at 565. The district court concluded that there public 433 B.R. were two primary circumstances in which a bankruptcy court should invoke § 1506: first, when the foreign proceeding was procedurally unfair; and second, when the application of foreign law or the recognition of a foreign main proceeding under Chapter 15 would severely impinge the value and import of a U.S. statutory or constitutional right, such that granting comity would severely 14 hinder United States bankruptcy courts abilities to carry out . . . the most fundamental policies and purposes of these rights. Id. at 568-69 (internal quotation marks omitted). application of that standard unclear on [the] Finding the record, the court also directed the bankruptcy court on remand to consider whether conditioning the applicability of § 365(n) was a prohibited action manifestly contrary to the public policy of the United States under § 1506. Id. at 570-71. On remand to the bankruptcy court On remand, Jaffé filed papers in the bankruptcy court in which he committed to re-license Qimonda s patent portfolio to the Licensees royalty. at a reasonable and nondiscriminatory ( RAND ) He stated that he was prepared to enter into good faith negotiations with the Licensees to set the royalty rates and, if necessary, to submit the rate amounts to arbitration before the World Intellectual Property Organization ( WIPO ). 2 2 RAND royalties are relatively common in high-tech industries because of the role played by standard-setting organizations, which help ensure the interoperability of products, among other functions. To avoid the holdup problem in this context, standard-setting organizations typically require their members to agree in advance to license any patent identified as necessary to a standard at RAND terms. Both Qimonda and the Licensees belong to such an organization. Nonetheless, the Federal Trade Commission has observed that there is much debate over whether such RAND . . . commitments can effectively prevent patent owners from imposing excessive royalty obligations on licensees, noting complaints by industry 15 In March evidentiary 2011, hearing, the bankruptcy receiving court testimony held a regarding four-day the likely effects of applying § 365(n) to licenses under Qimonda s U.S. patents. Jaffé testified at the hearing that a ruling applying § 365(n) would render the central assets of [Qimonda s] estate, that is [its] U.S. patents . . . largely worthless. He also said that such a ruling would violate the principle of equal treatment of creditors under German law by giving the Licensees preferential treatment over Qimonda s other creditors. Jaffé also presented the expert testimony of Dr. William Kerr, an economist, who concluded that based on his review of existing licenses and licensing practices in the semiconductor industry, Qimonda s estate would receive approximately $47 million per year if Jaffé were allowed to re-license Qimonda s U.S. patents covering DRAM products at RAND terms. Observing that $47 million would represent a small fraction of what the Licensees spend on research and development every year, Kerr gave his opinion that discontinuance of the cross-licenses at issue [and subsequent re-licensing at a RAND rate] would not representatives that the term RAND is vague and ill-defined -particularly with regard to what royalty rate is reasonable. Fed. Trade Comm n, The Evolving IP Marketplace: Aligning Patent Notice and Remedies with Competition 192-93 (2011). 16 unduly impair the function of the semiconductor industry or the [Licensees]. By contrast, the Licensees witnesses testified to the harm that would befall the Licensees, as well as the semiconductor industry as a whole, if the reference to § 365(n) were removed from the Supplemental Order. the Licensees destabilizing economist, the system For example, Dr. Jerry Hausman, gave of his licensing opinion that that has [b]y enabled the extraordinary success of the semiconductor industry and other industries, failure to apply Section 365(n) would reduce investment, innovation, and competition, which would harm U.S. productivity growth productivity and calculation of U.S. consumers consumers. Hausman the and likely RAND as well also royalty as worldwide disputed rates, Kerr s forecasting significantly higher sums and arguing that the holdup threat could not be eliminated. Moreover, in Hausman s view, Jaffé s offer to re-license the U.S. patents at RAND terms could not provide adequate protection for the interests of the [Licensees], in part because of the danger that Jaffé would subsequently sell the patent portfolio to an entity that might itself file for bankruptcy, [Licensees ] licenses once again. 17 thus extinguish[ing] the The bankruptcy court s decision on remand At the conclusion of the hearing, the bankruptcy court issued a memorandum opinion denying Jaffé s motion to amend the Supplemental Order and confirming that § 365(n) applies with respect to Qimonda s U.S. patents. at 185. In re Qimonda AG, 462 B.R. The court assumed for the purpose of its analysis that Jaffe s interpretation of German law was correct and that § 103 of the German Insolvency Code would authorize him to terminate the Licensees right to practice Qimonda s patents. With that assumption, the court concluded that the balancing of debtor and creditor interests required by § 1522(a) . . . weighs in favor of making § 365(n) applicable administration of Qimonda s U.S. patents. Explaining its balancing analysis, to Dr. Jaffé s Id. at 182. the bankruptcy court recognized that its ruling would result in less value . . . being realized by the Qimonda estate but noted that Qimonda s patents would by no means be rendered worthless. 182. would 462 B.R. at On the other hand, the court found that a contrary ruling create investment the a very real [Licensees] risk . . . to the [had] very substantial collectively made in research and manufacturing facilities in the United States in reliance on the design freedom provided by the cross-license agreements. Id. Jaffé s to offer at 182-83. re-license The Qimonda s 18 court acknowledged patents on RAND that terms would lessen the holdup risk, but observed that, because of the Licensees sunk costs, [they would] not have the option of avoiding royalties altogether by designing around the patent. Id. at 181-82. As an independent ground for its decision, the bankruptcy court also concluded, under 11 U.S.C. § 1506, that deferring to German law, to the extent it allows cancellation of the U.S. patent licenses, would be manifestly contrary to U.S. public policy. 462 B.R. at 185. Referencing the legislative history of Congress s enactment of the Intellectual Property Licenses in Bankruptcy Act, Pub. L. No. 100-506, 102 Stat. 2538 (1988), the court noted that § 365(n) resulted from Congress s determination that allowing patent licenses to be terminated in bankruptcy would impose[] development. a burden on American technological In re Qimonda AG, 462 B.R. at 184 (quoting S. Rep. No. 100-505, at 1 (1988), reprinted in 1988 U.S.C.C.A.N. 3200, 3200). Informed by this congressional policy choice, the court reasoned that [a]lthough innovation would obviously not come to a grinding halt if licenses to U.S. patents could be cancelled in a foreign insolvency proceeding, the court is persuaded by Professor Hausman s testimony that the resulting uncertainty would nevertheless slow the pace of innovation, to the detriment of the U.S. economy. Id. at 185. On this basis, the court concluded that failure to apply § 365(n) under the 19 circumstances of this case and this industry would severely impinge an important statutory protection accorded licensees of U.S. patents and thereby undermine a fundamental U.S. public policy promoting technological innovation. Id. The bankruptcy court thus held that public policy, as well as the economic harm that would otherwise result to the [L]icensees, require[d] that the protections of § 365(n) apply to Qimonda s U.S. patents. 462 B.R. at 167-68. The direct appeal to the court of appeals Jaffé from the appealed the district bankruptcy court a court s certification ruling under 158(d)(2) for a direct appeal to this court. concluded that the bankruptcy court s and 28 sought U.S.C. § The district court order qualified for certification, and, by order dated June 28, 2012, we authorized the direct appeal. See 28 U.S.C. § 158(d)(2). II Congress enacted Chapter 15 of the Bankruptcy Code in 2005 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 23, stating that its purpose was to incorporate the Model Law on CrossBorder United Insolvency, Nations which had Commission been on developed in International 1997 by Trade the Law ( UNCITRAL ), so as to provide effective mechanisms for dealing 20 with cases of cross-border insolvency. 11 U.S.C. § 1501(a); see also H.R. Rep. No. 109-31, pt. 1, at 105 (2005), reprinted in 2005 U.S.C.C.A.N. replaced former 11 88, 169. U.S.C. In § 304, this which respect, Chapter authorized 15 bankruptcy courts to award appropriate relief in a case ancillary to a foreign proceeding but which was largely discretionary. U.S.C. § 304(c) objectives: other (2000). Chapter 15 lists five See 11 specific (1) to encourage cooperation with the courts and competent authorities of foreign countries involved in cross-border cases; (2) to increase legal certainty for trade and investment; (3) to promote the fair and efficient administration of cross-border insolvencies so as to protect[] the interests of all creditors, and other interested entities, including the debtor; (4) to protect and maximize the value of the debtor s assets; and (5) to financially troubled businesses. facilitate the rescue of 11 U.S.C. § 1501(a); see also H.R. Rep. No. 109-31, pt. 1, at 105. To further these stated objectives, Chapter 15 authorizes the representative of a foreign insolvency proceeding to commence a case in a U.S. bankruptcy court by filing a petition for recognition of the foreign proceeding. 1509(a), 1515. 11 U.S.C. §§ 1504, If the petition meets the requirements listed in § 1517, the court must enter an order granting recognition of the foreign proceeding. And if 21 that foreign proceeding is pending in the country where the debtor has the center of its main interests, proceeding. With the it is recognized as a foreign main 11 U.S.C. § 1517(b)(1); see also id. § 1502(4). entry proceeding, of the an order foreign recognizing representative a of foreign the main proceeding automatically receives relief as stated in § 1520, including the automatic stay created by § 362 with respect to the debtor and its property within the United States and the ability to operate the debtor s business within the United States under § 363, as well as the right to sue and be sued and the right to intervene in any proceedings in a State or Federal court in the United States in which the 1509(b)(1), 1524. debtor is a party. Id. §§ 1520(a), Moreover, the statute provides that following entry of a recognition order, a court in the United States shall grant comity representative, Chapter 15. thereby or cooperation implementing a to the principal foreign purpose of Id. § 1509(b)(3). Even before entry of the order granting recognition, § 1519 authorizes the bankruptcy court, on the foreign representative s request, to grant preliminary relief when urgently needed to protect the creditors. assets of the debtor or the interests of the 11 U.S.C. § 1519. In addition to the automatic relief that comes with the entry of an order granting recognition 22 of a foreign main proceeding, § 1521 authorizes discretionary relief. necessary protect to creditors, assets of the court representative, grant 1521(a). bankruptcy court to grant Specifically, § 1521 provides that where effectuate the the the purpose the debtor may, any at of or the this the and interests request appropriate chapter of relief. of the 11 to the foreign U.S.C. § This discretionary relief may include entrusting the administration or realization of all or part of the debtor s assets within the territorial jurisdiction of the United States to the foreign representative, id. § 1521(a)(5), as well as entrust[ing] the distribution of all or part of the debtor s assets located in the United States to the foreign representative, id. § 1521(b). The bankruptcy court, however, may relief only grant discretionary determines that interested entities, protected. the Id. § interests including of the 1522(a). It under the § 1521 creditors debtor, may are also if and it other sufficiently subject the discretionary relief it grants under § 1521 to conditions it considers appropriate, including the giving of security or the filing of a bond. Id. § 1522(b). Finally, all of the actions authorized in Chapter 15 are subject to chapter prevents governed by § 1506, this the which provides court chapter if from the 23 that [n]othing refusing to action would take be in an this action manifestly contrary to the public policy of the United States. 11 U.S.C. § 1506. Chapter 15 thus authorizes an ancillary proceeding in a United States bankruptcy court that is largely designed to complement and assist a foreign insolvency proceeding by, among other things, bring[ing] people and property beyond the foreign main proceeding s jurisdiction into the foreign main proceeding through the exercise of the United States jurisdiction. In re ABC Learning Centres Ltd., 728 F.3d 301, 307 (3d Cir. 2013); see also H.R. Rep. No. 109-31, pt. 1, at 106 ( Cases brought under chapter 15 are intended to be ancillary to cases brought in a debtor s home country . . . ). This structure reflects the United States policy in favor of a general rule that countries other than proceeding ancillary preference the home would be proceedings to a country of brought, in system aid of the should of full the debtor, where usually main act a main through proceedings, bankruptcies (often in called secondary proceedings) in each state where assets are found. H.R. Rep. general No. policy, 109-31, Chapter pt. 15 1, at also 108. Notwithstanding expressly contemplates this that [a]fter recognition of a foreign main proceeding, a case under another chapter of [the Bankruptcy Code] may be commenced . . . if the debtor has assets in the United States. § 1528. 24 11 U.S.C. Thus, taken as a whole, Chapter 15 -- like the Model Law on which it was based -- takes several modest but significant steps toward implementing a modern, harmonized and fair framework to address more effectively instances of cross-border insolvency. Law on UNCITRAL, Guide to Enactment of the UNCITRAL Model Cross-Border Insolvency Law Insolvency, 307, 307 in (2005) Legislative Guide Guide (hereinafter, on to Enactment ). III Jaffé contends that the bankruptcy court erred by employing § 1522(a) s right to sufficient administer protection [Qimonda s] requirement U.S. patents to . subject his . the . to constraints imposed by § 365(n), thus allowing the Licensees to elect to retain their license rights under Qimonda s patents, contrary to German law as he understands it. Qimonda AG, 462 B.R. at 183. U.S. In re The bankruptcy court limited the authority it conferred on Jaffé under § 1521(a)(5) by balancing the interests of the Licensees with the interests of Qimonda s estate under § 1522(a) and concluding that the Licensees should receive the protection of § 365(n). Id. at 180-83. In support of his challenge, Jaffé makes essentially three arguments: (1) that the district court and the bankruptcy court erred in even considering § 1522(a), because 25 that section applies only to relief granted under § 1521, that the relief granted under § 1521 may be requested only by the foreign representative, and that he, as the foreign representative, never requested the inclusion of § 365(n) as part of the § 1521 relief; (2) that the bankruptcy court misunderstood the type of protection afforded by § 1522(a) by applying a test that balanced the debtor s interests and the creditors interests instead of a test that placed all balancing creditors the on competing an equal footing; interests, the and (3) that bankruptcy in court overstated the risks to the Licensees, especially in view of Jaffé s offer to re-license Qimonda s patents to failed to treat all creditors interests equally. them, and We address these points in order. 3 3 We note as well that the United States has appeared as amicus curiae to express its concern that the bankruptcy court overstepped its authority below. Specifically, it criticizes the bankruptcy court as approach[ing] this case as though it were empowered to decide whether the Foreign Administrator should be permitted to reject appellees license agreements based on an erroneous assumption that it could superimpose Section 365(n) on the operation of German insolvency law in a German proceeding. The United States therefore urges us to reverse[] on the threshold ground that Section 365(n) cannot constrain the operation of German insolvency law in Germany. As already made clear, however, we take a different view of the scope of the bankruptcy court s holding. Rather than purporting to constrain the operation of German insolvency law in Germany, the bankruptcy court conditioned its grant of power to Jaffé to administer the assets of Qimonda AG within the territorial jurisdiction of the United States with the limitation that he was taking the company s U.S. patents subject 26 A First, Jaffé argues that both the bankruptcy court and the district court erred in even considering § 1522 s sufficient protection requirement because § 1522(a) applies to relief that may be granted under § 1521, and § 1521(a), in turn, provides that the court representative, added). may, grant any at the request appropriate of relief. the foreign (Emphasis He asserts that he never asked the bankruptcy court to include § 365 in its Supplemental Order or sought other relief relating to § 365(n) such that the Licensees would have the option to retain their licenses under Qimonda s U.S. patents. Thus, according to Jaffé, because application of § 365 was not specifically requested by him, the bankruptcy court s sua sponte inclusion of § 365 was legal error, the correction of which must precede any consideration of § 1522(a) s sufficient protection requirement. We believe that Jaffé s view of the relationship between § 1521(a) and § 1522(a) is too myopic. While it is true that to the preexisting licenses, which he was obliged to treat in a manner consistent with § 365(n). As a result, Jaffé is precluded from rejecting the U.S. patent licenses as a matter of U.S. law. Although this limitation may have indirect effects in the German proceeding, it does not represent an impermissible application of U.S. law extraterritorially, which we understand to be the main concern animating the United States position in this case. 27 Jaffé never affirmatively requested rejection authority under § 365, he did request several forms of discretionary relief under § 1521, among which was the privilege, pursuant to § 1521(a)(5), to have the bankruptcy court entrust him with [t]he administration or realization of all or part of the assets of [Qimonda] within the territorial jurisdiction of the United States, specifically identifying the company s U.S. patents as among the prerequisite U.S. to assets awarding he sought any § to 1521 control. relief, And, the as court a was required to ensure sufficient protection of the creditors and the debtor. Section 1522(a) states this explicitly, providing in relevant part, The court may grant relief under section . . . 1521 . . . only if the interests of the creditors and other interested protected. entities, 11 including U.S.C. § the debtor, 1522(a) are sufficiently (emphasis added). Additionally, the court was authorized to subject any § 1521 relief to conditions it considers appropriate. Id. § 1522(b); see also H.R. Rep. No. 109-31, pt. 1, at 116 (describing § 1522 as giv[ing] the bankruptcy court broad latitude to mold relief to meet specific circumstances, including appropriate responses if it is shown that the foreign proceeding is seriously and unjustifiably injuring United States creditors ). This is precisely what the bankruptcy court did here. granted discretionary relief under 28 § 1521 and, as It mandated, considered 1522(a). the question of sufficient protection under § Upon such consideration, it conditioned its § 1521 relief on application of § 365(n), finding that such protection was appropriate in the circumstances presented. To be sure, the bankruptcy court did not frame its initial inclusion of § 365 in the Supplemental Order as a condition on the authority it was granting Jaffé under § 1521. initially faced with Jaffé s motion to amend, described the inclusion of § 365 as improvident. Indeed, when the court But on the Licensees appeal, the district court correctly recognized that it was incumbent on the bankruptcy court, on remand, to consider whether the interests of the creditors and other interested entities, including the debtor, [would be] sufficiently protected under § 1522(a) were the court to modify its earlier order so as to grant Jaffé control over the administration of Qimonda s U.S. patents without providing for the application of § 365(n) to the licenses on those patents. See In re Qimonda AG Bankr. Litig., 433 B.R. at 557-58. The bankruptcy court s consideration of § 1522(a) was thus undoubtedly appropriate when authorizing relief under § 1521. B Jaffé next contends that even if the bankruptcy court was correct to consider § 1522 s sufficient protection requirement 29 in granting § 1521 relief, the court nonetheless employed the wrong test in bankruptcy applying court s § 1522(a). ruling He fundamentally maintains that the misunderst[ood] the interests § 1522(a) protects by failing to recognize that § 1522(a) is merely a procedural protection designed to ensure that all creditors [could] participate in the bankruptcy distribution on an equal footing and thus should not be used to protect parties from the substantive bankruptcy law that would otherwise added). apply in the foreign main proceeding. (Emphasis He asserts that [d]isregarding foreign law based on an open-ended balancing test under § 1522(a) is contrary to Chapter 15 s basic design, which, according to Jaffé, requires U.S. courts to defer to foreign substantive law except only as allowed under § 1506, which provides a narrow exception when the court s action would otherwise policies of the United States. 109. violate the most fundamental H.R. Rep. No. 109-31, pt. 1, at In sum, he argues (1) that the bankruptcy court erred by interpreting § 1522 s sufficient protection requirement as incorporating a balancing test that could achieve a result that treated creditors differently and that would therefore be in tension with German law, and (2) that, to the extent § 1522(a) was implicated at all, the bankruptcy court should have limited its analysis to ensuring that the doors of the German insolvency 30 proceeding would be open to the Licensees on equal footing with Qimonda s other creditors. Jaffé s theory of how the sufficient protection requirement of § 1522(a) operates is not illogical. The text of the statute is broad and somewhat ambiguous regarding the test that courts should employ to determine if the interests of the creditors and other interested sufficiently protected. entities, including the 11 U.S.C. § 1522(a). debtor, are But we are not convinced that Jaffé s theory can fully be squared with the text or with Congress s intent in enacting the text. Section 1522(a) requires the bankruptcy court to ensure the protection of both the creditors and the debtor. 1522(a). 11 U.S.C. § The provision thus requires the court to ensure that the relief a foreign representative requests under § 1521 does not impinge excessively on any one entity s interests, implying that each entity must receive at least some protection. And because the interests of the creditors and the interests of the debtor are often antagonistic, as they are here, providing protection to one side might well come at some expense to the other. The analysis required by § 1522(a) is therefore logically best done by balancing the respective interests based on the relative harms and benefits in light of the circumstances presented, thus inherently calling balancing test. 31 for application of a We also find support for this interpretation in the Model Law on Cross-Border Insolvency, on which Chapter 15 was based. In enacting Chapter 15, codify the Model Law. so, it also accompanying stated that it See 11 U.S.C. § 1501(a). indicated Guide Congress strongly to that Enactment the by to And, in doing Model issued intended Law, and the UNCITRAL in conjunction with its adoption of the Model Law, should inform our interpretation of Chapter 15 s provisions. 15 provides that [i]n interpreting this Indeed, Chapter chapter, the court shall consider its international origin, and the need to promote an application application of of jurisdictions. this chapter similar that statutes is consistent adopted by with the foreign Id. § 1508; see also H.R. Rep. No. 109-31, pt. 1, at 109-10 ( Interpretation of this chapter on a uniform basis will be aided by reference to the Guide and the Reports cited therein, which explain the reasons for the terms used and often cite their origins as well. . . . To the extent that the United States courts rely on these sources, their decisions will more likely be regarded as persuasive elsewhere (emphasis added)). Thus, the Model Law and its Guide to Enactment also provide relevant guidance in determining the appropriate meaning of Chapter 15 s provisions. The Guide to Enactment contains a number of paragraphs that bear directly on the question of how a court should assess the 32 interests of others and protect them prior to granting the discretionary relief sought by a foreign representative. For example, the Guide acknowledges that the representative of a foreign main proceeding will normally seek[] to gain control over all assets of the insolvent debtor. ¶ 158, at 347. turnover of Guide to Enactment But it stresses that the Model Law makes [t]he assets discretionary, adding to the that foreign the representative Model Law contains . . . several safeguards designed to ensure the protection of local interests before assets are turned over to the foreign representative. Id. ¶ 157, at 347 (emphasis added). Chief among those safeguards is Article 22 of the Model Law, which is largely codified 4 as § 1522. 4 According to the Guide, The idea Article 22 of the Model Law provides in full: 1. In granting or denying relief under article 19 or 21, or in modifying or terminating relief under paragraph 3 of this article, the court must be satisfied that the interests of the creditors and other interested persons, including the debtor, are adequately protected. 2. The court may subject relief granted under article 19 or 21 to conditions it considers appropriate. 3. The court may, at the request of the foreign representative or a person affected by relief granted under article 19 or 21, or at its own motion, modify or terminate such relief. Comparing Article 22 and § 1522 reveals relied heavily on the language of the Model Law. 33 that Congress One of the few underlying [A]rticle 22 is that there should be a balance between relief that may be granted to the foreign representative and the interests of the persons that may be affected by such relief. This balance is essential to achieve the objectives of cross-border insolvency (emphasis added). legislation. Id. ¶ 161, at 348 The Guide to Enactment separately indicates that Article 22 is designed to protect the interests of the creditors (in particular local creditors), the debtor and other affected persons. Id. ¶ 35, at 314. Finally, the Guide states, [i]n addition to [Article 22 s] specific provisions, Article 6 of the Model Law in a general way provides that the court may refuse to take an action governed by the Model Law if the action would be manifestly contrary to the public policy of the enacting State. Id. ¶ 36, at 314 (emphasis added). Informed by the Guide to Enactment s description of the relationship between Articles 22 and 6 of the Model Law (§§ 1522 and 1506 in the U.S. Bankruptcy Code), we do not share Jaffé s view that § 1506 s public policy exception forecloses use of a balancing analysis under § 1522. Contrary to Jaffé s position, alterations that Congress made was to change adequately in Article 22(1) to sufficiently in § 1522(a) -- a modification that the legislative history indicates was made in order to avoid confusion with . . . adequate protection, a very specialized legal term in United States bankruptcy. H.R. Rep. No. 109-31, pt. 1, at 115. 34 Chapter 15 does not require a U.S. bankruptcy court, in considering a foreign representative s request for discretionary relief under § 1521, to blind itself to the costs that awarding such relief would impose on others under the rule provided by the substantive law of the State where the foreign insolvency proceeding is pending. anticipates the Instead, Chapter 15, like the Model Law, provision of particularized protection, as stated in § 1522(a). We therefore conclude, through interpretation of § 1522(a) s text and consideration of Chapter 15 s international origin, that § 1522(a) s the district sufficient court protection correctly requirement as interpreted requiring a particularized balancing analysis that considers the interests of the creditors and other interested entities, including the debtor, 11 U.S.C. § 1522(a), and, in this case in particular, a weighing of the interests of the foreign representative (the debtor) in receiving the requested relief against the competing interests of those who would be adversely affected by the grant of such relief (here, the Licensees). § 1506 is an additional, more And we also agree that general protection of U.S. interests that may be evaluated apart from the particularized analysis of § 1522(a). In reaching this conclusion, we join the Fifth Circuit, which interpreted § 1522(a) similarly, 35 based largely on the language in the Guide to Enactment. See In re Vitro S.A.B. de C.V., 701 F.3d 1031, 1060, 1067 n.42 (5th Cir. 2012); see also In re Int l Banking Corp. B.S.C., 439 B.R. 614, 626-27 (Bankr. S.D.N.Y. 2010); In re Tri-Cont l Exch. Ltd., 349 B.R. 627, 637 (Bankr. E.D. Cal. 2006). C Finally, Jaffé contends that the bankruptcy court s balancing analysis, even if assumed appropriate, was flawed in implementation. overstated the He risk argues to the that the Licensees court dramatically investments made in reliance on the cross-license agreements, especially in light of his offer to re-license Qimonda s U.S. patents to the Licensees at a RAND royalty rate. In this regard, he maintains that the court s balancing analysis failed to recognize that § 1522(a) requires courts to protect the interests of all creditors and other interested entities, including the debtor -- not just one set of contracting parties. The Licensees respond, arguing that the bankruptcy court properly recognized that Dr. Jaffé s offer to relicense did not change the correctly balance concluded of harms that, and without that § the 365(n) bankruptcy court protection, the Licensees would face both the immediate harm of a hold-up and the future . . . destabilization of the licensing regime in the 36 semiconductor industry. bankruptcy court s They maintain that in light of the detailed findings and careful reasoning, Jaffé simply cannot meet his heavy burden to demonstrate that the bankruptcy court abused its discretion in its application of § 1522. It should be noted that after hearing four days of evidence, the bankruptcy court considered the outcome of its balancing analysis to be a close one. But in the end it concluded, reasonably we believe, that the balancing of debtor and creditor interests required by § 1522(a), Bankruptcy Code, weigh[ed] in favor of making § 365(n) applicable to Dr. Jaffé s administration of Qimonda s U.S. patents. 462 B.R. at 182. In re Qimonda AG, The court recognized Jaffé s claim that the application of § 365(n) [would] result in less value . . . being realized by the Qimonda estate. Qimonda s patent portfolio [would] Id. by no But it noted that means be rendered worthless because the U.S. patents [could] still be licensed to parties that [did] not already have a license, and Dr. Jaffé, to the extent permitted by German law, [would] be able to fully monetize the bankruptcy § 365(n) . non-U.S. court . . found [would patents. it Id. significant impose] no that Additionally, [a]pplication affirmative burden on the of Dr. Jaffé, id., but instead would merely limit his ability -- and, importantly, the ability of the patents subsequent owners -- to 37 bring infringement actions against the very Qimonda had previously promised not to sue. entities that See Imation Corp. v. Koninklijke Philips Elecs. N.V., 586 F.3d 980, 987 (Fed. Cir. 2009) (characterizing a patent cross-license agreement as essentially a promise by the licensor not to sue the licensee for infringement (citation omitted)). In considering and weighing the Licensees interests, the bankruptcy court largely credited their evidence indicating that entrusting Jaffé with the right to administer Qimonda s U.S. patents without making § 365(n) applicable to the preexisting licenses effects. under those patents would have broad-ranging ill It explained that the risk to the very substantial investment the [Licensees] -- particularly IBM, Micron, Intel, and Samsung -- [had] collectively made in research and manufacturing facilities in the United States in reliance on the design freedom provided by the cross-license agreements, though not easily quantifiable, [was] nevertheless very real. Qimonda AG, 462 B.R. at 182-83. In re While the bankruptcy court acknowledged that the Licensees had been unable to identify specific Qimonda manufacture[d] and patents s[old], implicated it noted by that the the products lack of they such evidence was not at all surprising, since the whole point of portfolio cross-licenses [was] to eliminate the necessity (and in some cases impossibility) of individually analyzing each and 38 every patent that might possibly apply to determine if a new design infringe[d] on it. Id. at 181. bankruptcy in court could not, the Thus, although the course of its balancing analysis, make a finding that cancellation of the [Licensees ] right to use Qimonda s U.S. patents would have a specific dollar impact on them, it did find that it create[d] a substantial risk of harm, litigation can infringement. adding be as that the damaging threat as an of actual infringement finding of Id. We find the bankruptcy court s thorough examination of the parties competing interests to have been both comprehensive and eminently reasonable. Jaffé relies heavily on the mitigation that would result from his commitment Licensees on RAND sufficient protection to re-license terms, for arguing their Qimonda s that interests. it patents would Of to the provide course, his proposal -- first mentioned after the district court s remand -does weigh risks. in his favor by decreasing the Licensees holdup But just because the RAND proposal would reduce the Licensees risks does not mean that their interests would be sufficiently protected by Jaffé s promise to re-license. The bankruptcy court expressly recognized this, explaining that the hold-up risk is lessened by Dr. Jaffé s offer to re-license the patents on RAND terms, but emphasizing that even if the WIPO 39 expert determination process were to arrive at the same figure that would have been agreed to in an ex ante scenario, the [Licensees], because of their sunk costs, [would] not have the option of avoiding royalties altogether by designing around the patent. In re Qimonda AG, 462 B.R. at 181-82. that bankruptcy the court s findings in this We conclude regard are not unreasonable and that the bankruptcy court was justified in its skepticism of Jaffé s claim that the Licensees interests would now be sufficiently protected by his commitment not to charge them an exorbitant rate during their re-licensing negotiations. Moreover, the bankruptcy court also noted that it remained an open question whether any new license issued by Jaffé on RAND terms would itself be secure, expressing its concern that Dr. Jaffé could still sell the underlying patents to a purchaser -- whether a practicing entity or a troll -- that might itself file for insolvency under German law or transfer the patent to a special purpose entity for the purpose of having it file for insolvency under German law. Id. at 181-82 n.13. The court s recognition of this concern was also reasonable, as it is far from clear whether, having once facilitated the termination of license rights in a foreign insolvency proceeding, the genie could ever be put back into the bottle. Rather, as indicated by expert testimony that the bankruptcy court credited, it would seem all too likely that such a result would introduce a dangerous degree of uncertainty 40 to a licensing system that plays a critically important role in the semiconductor industry, as well as other high-tech sectors of the global economy. At bottom, we affirm the decision of the bankruptcy court, finding reasonable its exercise of discretion in conducting the balancing analysis under § 1522(a) and concluding that attaching the protection of § 365(n) was necessary when granting Jaffé the power to administer Qimonda s U.S. patents. S.A.B. de affirming C.V., a 701 F.3d bankruptcy at 1069 court s (noting decision See In re Vitro in not the to course enforce of the reorganization plan adopted in a foreign main proceeding that [i]t is not our role to determine whether the above-summarized evidence would lead us to the same conclusion and adding that [o]ur only task is to determine whether the bankruptcy court s decision was reasonable (emphasis added)). IV It is important, we think, to recognize, as Jaffé would have us do, the importance of Chapter 15 to a global economy, in which businesses needing bankruptcy protection increasingly have assets in various countries. In mimicking the U.N. s Model Law on Cross-Border Insolvencies, Chapter 15 furthers a policy of the United providing States fair and of cooperating efficient with insolvency 41 other countries proceedings for in such international businesses. Chapter 15 insolvency provides Consistent with its stated purposes, for proceedings, the see ready 11 recognition U.S.C. § of and 1517, foreign grants automatic relief to protect U.S. assets upon entry of an order granting recognition, see id. § 1520. It also provides for a broad range of discretionary relief under § 1521. Thus, it represents a full commitment of the United States to cooperate with foreign insolvency proceedings, as called for by the U.N. s Model Law on Cross-Border Insolvency. And at bottom, such cooperation will provide greater legal certainty for trade and business to the benefit of the global economy. But the United States commitment is not untempered, as is manifested in both Chapter 15 and the Model Law on which it was based. Thus, § 1522(a) requires that a bankruptcy court, when granting the discretionary relief authorized by § 1521, ensure sufficient protection of creditors, as well as the debtor. And at a more general level, § 1506, which covers any action under Chapter 15, authorizes a bankruptcy court to refuse to take an action that would be manifestly contrary to U.S. public policy. In this case, it is sufficient for us to affirm bankruptcy court, based on its application of § 1522(a). doing so, we understand that, by affirming the the But in bankruptcy court s application of § 365(n) following its balancing analysis under § 1522(a), we also indirectly further the public policy 42 that underlies § 365(n). The Senate Report accompanying the bill that became § 365(n) explicitly recognized that licensees have a strong intellectual that to interest property deny them in maintaining following that right the their right would use bankruptcy licensor s to and impose[] a burden on American technological development that was never intended by Congress. S. Rep. No. 100-505, at 1. The Report added that [t]he adoption of this bill will immediately remove that burden and its attendant Technology. In threat to the development of American Id. at 2. this case, the bankruptcy court, in weighing the respective interests of the Licensees and the debtor under § 1522(a), found that without the protection of 365(n), the risk of harm design to the freedom agreements. Licensees provided would be very [them] by real, impairing the the cross-license In re Qimonda AG, 462 B.R. at 183. And as the bankruptcy court otherwise found, this potential harm to the Licensees would, in turn, threaten to slow the pace of innovation in the United States, to the detriment of the U.S. economy. Id. at 185. Thus, the court s findings, which were, to be sure, focused on the Licensees interests, nonetheless necessarily furthered the public policy underlying § 365(n). We thus recognize that by affirming the bankruptcy court, even though on its § 1522(a) 43 analysis, we too necessarily further the public policy inherent in and manifested by § 365(n). The judgment of the bankruptcy court is accordingly AFFIRMED. 44 WYNN, Circuit Judge, concurring in the judgment: The only question we need to address in this appeal concerns the bankruptcy court s discretion in ensuring that the interests of the creditors and other interested entities, including the debtor, are sufficiently protected under Chapter 15 of the Bankruptcy Code, 11 U.S.C. § 1522, and whether the bankruptcy court abused that discretion here. I agree with the majority opinion that in reviewing this issue, we look not to whether the record evidence would lead us to the same conclusion but that [o]ur only task is to determine whether the bankruptcy court s decision was reasonable. S.A.B. de C.V., 701 F.3d 1031, 1069 (5th In re Vitro Cir. 2012). Accordingly, I am happy to concur in the language in Parts I, II, and III of the majority opinion that analyzes and addresses only this issue. I do not join unnecessary dictum. 45 in Part IV because it is
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