IN RE CFLC, INC. 673 ‘cue ae 69 F.3d 673 (th Ci. 1996) In re: CFLG, INC, a Delaware corpora- tion, formerly known as Everex Systems, Inc, a Delaware corporation, Debtor. EVEREX SYSTEMS, INC, a California corporation formerly known as Yside, Incorporated, Appellant, CADTRAK CORPORATION, Appellee, No, 9416960, United States Court of Appeals, Ninth Cirenit, Argued and Submitted Feb. 16, 1996, Decided July 16, 1996. After receiving permission to sell its re- maining, assets to buyer, Chapter 11 debtor moved to assume and assign nonexclusive patent lleense to hayer, and patent holder objected. ‘The Bankruptey Court, Randall J Newsome, J., denied motion. Debtor and buyer appealed. The United States District Court for the Northern District of California, Claudia Wilken, J., affirmed, 174 BR. 119, Buyer appealed. The Court of Appeals, Pre- gerson, Cirenit Judge, held that: (1) as sue- cessful buyer of substantial partion of Chap- ter 11 debtor's assets, buyer was “person aggrieved” with standing to appeal from bankeuptey court's order; (2) federal, not state, law governed assignability of patent licenses; and (8) federal law excused patent holder from accepting performance from, or rendering it to, anyone other than debtor licensee, and thus patent license was not assumable and assignable in bankruptey. Affirmed. Kleinfeld, Cireuit Judge, concurred in result 1. Bankruptey ©3782 Court of Appeals’ review of district court's decision, on appeal from hankruptey court, is de novo. 2 Bankruptey ©3732, 3786 Court of Appeals reviews hankruptey court's findings of fact for clear error and ita ‘onchsions of law de nove. 3, Bankruptey 3771 As successful buyer of substantial por- tion of Chapter 11 debtor's assets, buyer was “person aggrieved” with standing to appeal from bankruptey com's denial of debtor's motion to assume and assign patent license, despite patent holder's contention that buyer ‘was merely disappointed bidder with respeet to license, since buyer was adversely and directly affected pecuniarily by order; assets purchase agreement between debtor and buyer, approved by bankruptey court, specifi- cally included all of debtor's interest in intel- lectual property rights, inchuding patents, that might be assigned by debtor, and specif. ically granted buyer the right to designate contracts that debtor would nse its best ef forts to have assigned to buyer. See. publication Words and Phrases for other judicial constructions and det 4, Bankruptey ©8771 “Person aggrieved” test limits appellate standing to those persons who are directly and adversely affected pecuniarily by arder of bankruptey court. 5. Bankruptey 3106 Patent license was “exeeutory contract ” under Bankruptey Code provision allowing assumption and assignment of exeeutory contracts, since lieensor owed signifieant continued performance to Chapter 11 debt- or-censee, and leensee also owed perfor- ‘mance; licensor had to continue to refrain from suing licensee for infringement, since nonexclusive patent license was essentially waiver of right to sue licensee for infringe- ment, and licensee had duty to mark all produets made under license with proper statutory patent notice, Banky.Code, 11 USCA. § 968. ‘See_ publication Words and Phrases for other judicial constructions and def 6. Bankruptey 3105.1 Although patent license stated that it ‘was to be construed according to California674 Jaw, federal law governed assignability of license, for purposes of determining whether Bankruptey Code barred assumption and as- siggnment of patent license held by Chapter 11 debtor-licensee; conflict existed between federal patent poliey and state laws, such as California's, that would allow assignabiity. Bankr.Code, 11 US.C.A. § 365(0). 47, Patents 21101) Construction of patent license is general- ly matter of state contract law, except where state law would be inconsistent with aims of federal patent policy. 8, Patents 1 Fundamental policy of patent system is to encourage creation and disclosure of new, ‘useful, and nonobvious advances in technolo- ‘gy and design by granting inventor the re- ‘ward of exclusive right to practice invention for period of years. 9, Patents 213 Federal law governs assignability of pat- cent licenses, due to conflict between federal patent policy and state laws that would allow assignability; allowing states to allow free assignability of nonexclusive patent licenses ‘would undermine patent system's goal of en- couraging invention, as party secking to use patented invention could either seek license from patent holder or seek assignment of existing patent license from licensee, and patent holder would lose important ability to control identity ofits licensees. 10, Bankruptey €3105.1 Federal law, which made nonexclusive ppatent license personal and nonassignable absent consent of licensor, excused licensor from accepting performance from, or render- ‘ng it to, anyone other than Chapter 11 debt- or-lieensee, and thus patent lieense was not assumable and assignable in bankruptey. Bankr-Code, 11 US.CA. § 365(0). 11. Patents 213 Federal law holds nonexclusive patent license to be personal and nonassignable; |. Before the bankruptcy proceedings, CFLC was known as Everex Systems, Ine, andthe company row known as Everex Systems, Inc. was known fs Yside Corporation. For the sake of simplicity 89 FEDERAL REPORTER, 3d SERIES nonexclusive lieensee of patent has only per- sonal, not property interest in patent, and this personal right cannot be assigned unless patent owner authorizes assignment. or li- cense itself permits assignment, Patrick M, Costello, and Mari A. Wayne, Murray & Murray, Palo Alto, California, for appellant Everex Systems, Ine K. John Shaffer, Stutman, Treister & Glatt, Los Angeles, California, for appellee Cadtrak Corporation. ‘Appeal from the United States District ‘Court for the Northern Distret of California, Claudia Wilken, District Judge, Presiding. D.C. No. CV.94-01079-0W. Before: SNEED, PREGERSON, and KLEINFELD, Cireuit Judges. PREGERSON, Circuit Judge: Everex Systems, Ine, a buyer of certain of the assets of CFLG, Ine. in a Chapter 11 ‘bankruptey, appeals the distret court's affr- rmanee of a bankruptey court order denying CFLC’s motion as debtor to assume and assign to Everex a patent lieonse from Cad- trak Corporation to OFLC. We have juris- dietion under 28 U.S.C. § 158(@) and affirm. FACTUAL BACKGROUND AND PROCEDURAL HISTORY Ina 1986 agreement, as modified by a 1989 supplemental agreement, Cadtrak, in return for a one-time $200,000 payment, granted CFLC, a personal computer company, a roy- alty-free, worldwide, nonexclusive license to use certain computer graphies technology for which Cadirak holds a patent (the “Cadtrale license”). The license agreement specified, among other things, that the license was non- ‘transferrable, that it extonded to any eompa- ny more than 50% of which was owned by GFLC, that it conferred on CFLC no right and consistency, the two firms are refered to as ‘CFLC” and "Everex", respectively, throughout this opinion, regardlss of the name used st the time of the events deseribedIN RE CFLC, INC. 675 che as89 F.3d 68 (SC. 1986) ‘to subliconse, that it could be terminated by Cadtrak upon CFLC’s bankruptey, and that it was to be construed according to California law. On January 4, 1998, CFLC began a Chap- ter I1 proceeding, in the course of which it sold certain divisions, foreign subsidiaries, and assets for nearly $20 million. Tt then sought and received approval to sell “sub- stantially all” of its remaining assets to Eve- rex. The sale closed on November 12, 1998; ‘Everex paid approximately $4 millon, ‘The sale agreement provided that the parties would seek the assumption and as- signment by CFLC to Bverex of certain designated executory contracts, and for the ‘designation up to 80 days alter the closing date of additional contracts to be assumed and assigned; Everex acknowledged that the bankruptey court had the final decision fon the-assumption and assignment of the contracts. On December 8, 1988, Everex designated additional contracts, including the Cadtrak license. On January 4, 1994, CFIC moved to assume and assign exeeuto- ry contracts, including the Cadtrak license; Cadtrak objected to the assumption and as- signment, Bankruptey Judge Randall J. Newsome held @ hearing on the motion ‘on February 4 and orally denied the motion as to the Cadtrak lieonse; a written order fol- lowed. Everex and CFLC appealed to the Distriet Court, where Judge Wilken heard oral argu- ‘ment in September 1994 and affirmed the bankruptey court's dental in a written order ‘on October 4, 1994, published as Jn re CPLC, Ine, 14 BR. 119 (ND.Cal.1994). STANDARD OF REVIEW 11,21 We review a district court's deci sion on an appeal from a bankruptey court de novo. . Federal Deposit Insurance Comp. 1 Daily (In re Daily), 47 F.3d 965, 967 (9th Cir-1995). We review a bankeuptey court's findings of fact for elear error and its conelu- sions of law de novo. Robertson Peters (In re Weisman), 5 F8d 417, 419 (9th Cir, 1998), DISCUSSION Standing to Appeal (3,4) Cadtrak argues that Bverex lacks standing to pursue this appesl. Although the Bankruptey Code is silent on the question of appellate standing, this court has held that, the “person aggrieved” test, derived from the Bankruptey Act of 1898, governs appellate standing under the code. Fondiller v. Rob- ertson (In ve Fondiller), 707 F.2d 441, 442~ 43 (Gth Cir-1988). ‘That Lest limits appellate standing to “those persons who are directly and adversely affected pecuniarily by an or- der of the bankruptey court”. Id. at 442. Cadtrak argues that since CFL, the debtor, ‘has not appealed from the district court deci- sion, this court lacks jurisietion because Ev- ferex does not meet the “person aggrieved” test. See Tilley v. Vucurevich (In re Pecan Groves of Arizona), 951 F2d 242, 245 (9th Cir1991) ("Where the original party to a lavosuit decides not to appeal ..., the inter- enor must have independent standing to appeal”). Cadltrak argues that Hverex is merely an ‘unsuecossful bidder at a bankruptcy sale, a category of persons that several eases have held not to be “aggrieved” for standing pur- poses. See, eg, G-K Development Co. v. Broadmoor Place Investments, LP. (In ve Broadmoor Place Investments, L.P.), 994 Fed TH, 146 n. 2 (10th Cir. 1988), cert de- nied, — US. —, 114 SCt. 877, 127 LEd2d 78 (1994); Davis x Seidler (In re HST Gathering Co,), 125 BR. 466 (W.D:Tex. 1900; Big Shanty Land Corp. u Comer Properties, Inc, 61 BR. 272 (N.D.Ga.1985), ‘These eases do not deprive Everex of standing. They generally involve a euit by ‘one prospective purchaser of a debtor's asset who has lost out to another purchaser and therefore has not been able to purchase any of the debtor's assets. None of the cases denying appellate standing to a disappointed bidder for a debtor’s asset suggests that an actual successful buyer of a substantial por- tion of a debtor's assets—in this case alleg- edly substantially all of the assets of the debtor's core business—lacks standing. The purchase agreement between Everex and CFLC, approved by the bankruptey court, specifically included in the deseription of the