Free Memorandum Opinion - District Court of Delaware - Delaware

Case 1:04-cv-00213-JJF Document 15 Filed 06/27/2005 Page 1 of 4
IN THE UNITED STATES DISTRICT COURT J
FOR THE DISTRICT OF DELAWARE
IN RE: :
: Chapter ll
POLAROID CORPORATION, et al., : Bankruptcy Case No. 01-10864-PJW 0
: Jointly Administered
Debtors. 2
FUJI PHOTO FILM CO., :
Appellant, :
v. : Civil Action No. 04-0213
POLAROID CORPORATION, : l
Appellee. :
Joanne P. Pinckney, Esquire of BOUCHARD MARGULES & FRIEDLANDER, I
Wilmington, Delaware.
Of Counsel: Thomas Field, Esquire, Lawrence Rosenthal, Esquire
and Harold Olsen, Esquire of STROOCK & STROOCK & LAVAN LLP, New
York, New York.
Attorneys for Appellant.
Michael L. Vild, Esquire and Christopher Ward, Esquire of THE
BAYARD FIRM, Wilmington, Delaware.
Of Counsel: Charles I. Poret, Esquire, Stephen J. Gordon,
Esquire and Richard A. Stieglitz, Jr., Esquire of DECHERT LLP,
New York, New York.
Attorneys for Appellee.
MEMORANDUM OPINION
June 27, 2005
Wilmington, Delaware

Case 1:04-cv-00213-JJF Document 15 Filed 06/27/2005 Page 2 of 4
nan, District Judge. ‘
Before the Court is an appeal by Fuji Photo Film Co.
(“Fuji”) from the Order dated February 18, 2004 granting the
Debtor’s motion to assume and assign a cross patent license
agreement (the “License Agreement"). For the reasons discussed,
the Court will affirm the Bankruptcy Court’s Order dated February
18, 2004.
PARTIES' CONTENTIONS
By its appeal, Fuji contends that the Bankruptcy Court erred
in granting the Debtor's motion to assume and assign to OEP
Imaging Corp. (“New Polaroid”), the purchaser of the Debtors’
assets and executory contracts, a License Agreement between the
Debtors and Fuji dated March 18, 1998. Fuji contends that the
Bankruptcy Court’s Order violates the prohibition under Section
365(c) of the Bankruptcy Code and applicable non—bankruptcy law
against the non-consensual assignment of the right to further
assign certain non—exclusive patent licenses. Fuji contends that
the Bankruptcy Court had jurisdiction over which rights were
assigned to New Polaroid and that this dispute was ripe for
adjudication.
In response, the Debtors contends that the Bankruptcy Court
correctly concluded that it lacked jurisdiction to adjudicate
Fuji’s request for a declaratory judgment that New Polaroid could
not further assign the License Agreement. The Debtors contend
that New Polaroid and Fuji are strangers to the bankruptcy

Case 1:04-cv-00213-JJF Document 15 Filed 06/27/2005 Page 3 of 4
estate, and therefore, the Bankruptcy Court correctly concluded
that it lacked jurisdiction to adjudicate any future,
hypothetical dispute between them concerning a future assignment.
STANDARD OF REVIEW
The Court has jurisdiction to hear an appeal from the
Bankruptcy Court pursuant to 28 U.S.C. § 158(a). In undertaking
a review of the issues on appeal, the Court applies a clearly
erroneous standard to the Bankruptcy Court’s findings of fact and
a plenary standard to its legal conclusions. gee Am. Flint Glass
Workers Union v. Anchor Resolution Corp., 197 F.3d 76, 80 (3d
Cir. 1999). With mixed questions of law and fact, the Court must
accept the Bankruptcy Court's finding of “historica1 or narrative
facts unless clearly erroneous, but exercise[s] ‘p1enary review
of the trial court’s choice and interpretation of legal precepts
and its application of those precepts to the historical facts.’”
Mellon Bank, N.A. v. Metro Communications, Inc., 945 F.2d 635,
642 (3d Cir. 1991) (citing Universal Mineral, Inc. v. C.A. Hughes
g_QgL, 669 F.2d 98, 101-02 {Bd Cir. 1981)). The appellate
responsibilities of the Court are further understood by the
jurisdiction exercised by the Third Circuit, which focuses and
reviews the Bankruptcy Court decision on a ge ggyg basis in the
first instance. In re Telegroup, 281 F.3d 133, 136 (3d Cir.
2002).
2

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DISCUSSION
The Court finds that, by its Order dated February 18, 2004,
the Bankruptcy Court overruled Fuji’s Objection to the assumption
and assignment of the License Agreement to New Polaroid. Further,
the Bankruptcy Court concluded that it lacked jurisdiction to hear
and determine Fuji's request for a declaratory judgment holding
that New Polaroid could not further assign the License Agreement
in the future. The Court concludes that what Fuji seeks, to
reverse the Bankruptcy Court’s failure to resolve a question that
was not within its jurisdiction so as to negate the need for
litigation in another forum, would be inappropriate.
In the Court’s view, the Bankruptcy Court properly concluded
that it lacked jurisdiction over the subsequent assignment issue,
which involves parties unknown to the bankruptcy estate with ‘
respect to non-estate property. Once the License Agreement left
the bankruptcy estate, the Bankruptcy Court’s jurisdiction over
that asset ceased to exist.
Accordingly, the Court will affirm the Bankruptcy Court’s
Order dated February 18, 2004, approving the assumption and
assignment of the Fuji License Agreement to New Polaroid.
CONCLUSION
For the reasons discussed, the Court will affirm the Order of
the Bankruptcy Court dated February 18, 2004.
An appropriate Order will be entered.
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