                             PUBLISHED

                 UNITED STATES COURT OF APPEALS
                     FOR THE FOURTH CIRCUIT


                            No. 12-1802


MICHAEL JAFFÉ, 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    were        subject    to    cross-license       agreements           with

Qimonda’s       competitors,       as     was     common    in    the     semiconductor

industry    to     avoid    infringement         risks     caused    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     insolvency       administrator        appointed       by    the    Munich

court,    filed    an    application       in    the    Bankruptcy       Court      for    the

Eastern    District        of    Virginia       under   Chapter     15    of     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 cross-

license agreements, declaring that, under § 103 of the German

Insolvency Code, the licenses granted under Qimonda patents “are

no    longer    enforceable,”         including       the    licenses        under    the

company’s 4,000 U.S. patents.              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     order     granting    Jaffé       the    discretionary          relief     he

requested      under   §   1521(a)(5).            But,      following    a     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),       which    limits     a    trustee’s

                                           5
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      §     1522(a)    as    requiring       the

                                                6
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     manufacturing

operations and began to liquidate its estate.                                  The principal

assets      of   the    estate      consisted          of    its    approximately         10,000

patents,      including       about       4,000       U.S.   patents.         Most   of   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         manufacturers,            including        Infineon

Technologies     AG   (from    which    Qimonda      had   spun    off    in   2006),

Samsung    Electronics      Company,     International        Business     Machines

Corporation      (“IBM”),     Intel    Corporation,        Hynix    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     adopted    in     the    semiconductor        industry     in

response    to    infringement     risks     arising       from    the    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.      In re Qimonda AG, 462 B.R. 165, 175 (Bankr. E.D. Va.

2011).     “Indeed, such is the number of potentially applicable

patents that it is not always possible to identify which ones

might cover a new product . . . .”             Id.

                                         8
       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.                                Thus, to

avoid    this    holdup   premium      and       enhance    their       design   freedom,

competitors in the semiconductor industry have routinely entered

into    broad,    non-exclusive      cross-license              agreements    with      each

other,    “sometimes      with   the     addition          of    equalizing      payments

(either   up-front       payments   or    so-called         running       royalties)      to

account    for    differences       in    the       size        and   breadth     of    the

respective patent portfolios.”                   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   actions       that    [might]         frustrate       the

German Proceedings.”            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.                                At the

same    time,     it    also     entered      a    separate       Supplemental          Order

“grant[ing]       further      relief    under       11     U.S.C.       §    1521.”         The

Supplemental        Order       made    Jaffé        “the     sole           and    exclusive

representative         of    Qimonda    AG    in   the      United       States”     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.                        But one

subsection,      §    365(n),     limits      the     trustee’s     ability      to

unilaterally     reject     licenses     to    the     debtor’s     intellectual

property,    reserving     to   the   licensees      the   option   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 cross-

license 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      administrator       to    decide    whether     to

continue    to   perform   the    debtor’s    executory      contracts.        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.                       Alternatively, Jaffé

asked    the    court   to    add   a   proviso      to    the    Supplemental    Order

specifying      that    “Section     365(n)    applies       only    if   the   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 cross-

license agreements should be decided in the German insolvency

proceeding    by    applying       German     law.         The    court      accordingly

amended     its    Supplemental      Order     to     include          the   alternative

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]    sufficiently        protected.”             The    district     court

explained    that    §   1522(a)     required        the    bankruptcy           court   “to

balance the relief granted to the foreign representative and the

interests    of    those   affected      by    such    relief,          without     unduly

favoring one group of creditors over another.”                         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   public

policy of the United States,’” under 11 U.S.C. § 1506.                        433 B.R.

at   565.         The   district     court     concluded     that   there    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).                    Finding the

application   of    that    standard     “unclear    on    [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    at   a   reasonable      and   nondiscriminatory         (“RAND”)

royalty.    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   2011,    the     bankruptcy   court   held   a    four-day

evidentiary    hearing,     receiving    testimony   regarding   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.                  For example, Dr. Jerry Hausman,

the   Licensees’         economist,          gave       his    opinion       that        “[b]y

destabilizing      the       system    of    licensing        that    has    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       and    U.S.    consumers       as     well   as   worldwide

productivity      and        consumers.”          Hausman      also    disputed      Kerr’s

calculation       of    the     likely       RAND   royalty        rates,     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,          thus       “extinguish[ing]           the

[Licensees’] licenses once again.”




                                             17
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.”                        In re Qimonda AG, 462 B.R.

at 185.       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            to     Dr.     Jaffé’s

administration of Qimonda’s U.S. patents.”                            Id. at 182.

        Explaining          its   balancing       analysis,          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.”                                   462 B.R. at

182.     On the other hand, the court found that a contrary ruling

would    create         a    “very     real”     “risk         to    the   very      substantial

investment        the       [Licensees]     .    .   .    [had]      collectively        made   in

research and manufacturing facilities in the United States in

reliance on the design freedom provided by the cross-license

agreements.”            Id.       at   182-83.           The    court      acknowledged      that

Jaffé’s      offer      to    re-license        Qimonda’s           patents     on   RAND   terms

                                                18
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[]      a      burden        on     American      technological

development.’”        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     appealed      the     bankruptcy      court’s    ruling         and    sought

from    the     district       court    a    certification       under      28    U.S.C.      §

158(d)(2) for a direct appeal to this court.                      The district court

concluded       that     the    bankruptcy          court’s   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 Cross-

Border       Insolvency,”      which    had    been    developed       in   1997       by   the

United        Nations      Commission          on      International          Trade         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.         88,    169.        In    this    respect,       Chapter    15

replaced         former    11    U.S.C.       § 304,         which    authorized       bankruptcy

courts to award appropriate relief in a case ancillary to a

foreign proceeding but which was largely discretionary.                                   See 11

U.S.C.       §    304(c)    (2000).            Chapter          15     lists    five    specific

objectives:          (1) to encourage cooperation with “the courts and

other    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    facilitate       “the    rescue   of

financially troubled businesses.”                        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.                               11 U.S.C. §§ 1504,

1509(a), 1515.            If the petition meets the requirements listed in

§ 1517, the court must enter an order granting recognition of

the   foreign       proceeding.              And    if       that    foreign   proceeding       “is

                                                   21
pending in the country where the debtor has the center of its

main     interests,”         it       is      recognized          as    a        “foreign         main

proceeding.”         11 U.S.C. § 1517(b)(1); see also id. § 1502(4).

With     the   entry        of     an      order     recognizing             a     foreign        main

proceeding,         the     foreign          representative            of        the     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     debtor      is    a   party.”             Id.       §§   1520(a),

1509(b)(1), 1524.           Moreover, the statute provides that following

entry of a recognition order, “a court in the United States

shall      grant          comity        or      cooperation             to         the       foreign

representative,”          thereby        implementing         a    principal           purpose     of

Chapter 15.      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      assets       of     the    debtor    or       the       interests        of    the

creditors.”      11 U.S.C. § 1519.

       In addition to the automatic relief that comes with the

entry    of    an    order       granting       recognition            of    a     foreign        main

                                                22
proceeding,       §     1521       authorizes            the     bankruptcy            court      to    grant

discretionary relief.                  Specifically, § 1521 provides that “where

necessary    to       effectuate          the       purpose         of     this        chapter         and    to

protect    the        assets       of     the       debtor       or       the     interests            of    the

creditors,        the    court          may,        at     the      request          of     the        foreign

representative,          grant         any     appropriate            relief.”              11    U.S.C.      §

1521(a).     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   only      grant         discretionary               relief          under        §    1521       if    it

determines        that    “the          interests          of       the    creditors             and    other

interested        entities,            including          the       debtor,          are    sufficiently

protected.”             Id.        §    1522(a).               It     may       also        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     §     1506,          which    provides            that     “[n]othing            in       this

chapter    prevents        the         court        from    refusing            to     take      an     action

governed     by    this       chapter          if    the       action       would          be    manifestly

                                                     23
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    the       home   country         of    the    debtor,       where     a    main

proceeding       would       be   brought,            should       usually     act     through

ancillary       proceedings       in       aid    of     the       main    proceedings,       in

preference      to     a    system     of    full       bankruptcies         (often     called

‘secondary’ proceedings) in each state where assets are found.”

H.R.    Rep.    No.    109-31,       pt.    1,    at    108.        Notwithstanding         this

general    policy,         Chapter     15    also      expressly          contemplates      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.”                                   11 U.S.C.

§ 1528.

                                                 24
        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.”            UNCITRAL, Guide to Enactment of the UNCITRAL Model

Law     on        Cross-Border      Insolvency,     in     Legislative          Guide       on

Insolvency          Law     307,    307   (2005)        (hereinafter,          “Guide       to

Enactment”).


                                           III

        Jaffé contends that the bankruptcy court erred by employing

§   1522(a)’s        sufficient      protection    requirement        to   subject         his

“right       to    administer      [Qimonda’s]    U.S.     patents    .    .    .    to    the

constraints imposed by § 365(n),” thus allowing the Licensees to

elect    to        retain   their    license      rights    under     Qimonda’s           U.S.

patents, contrary to German law as he understands it.                                 In re

Qimonda AG, 462 B.R. at 183.                   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     that    section     applies        only    to


                                           25
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       creditors     on    an   equal   footing;     and    (3)   that    in

balancing            the         competing    interests,         the   bankruptcy      court

overstated the risks to the Licensees, especially in view of

Jaffé’s            offer    to     re-license     Qimonda’s      patents     to   them,    and

failed to treat all creditors’ interests equally.                                 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   may,   at     the   request    of     the    foreign

representative,    grant   any     appropriate    relief.”         (Emphasis

added).    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    U.S.     assets    he    sought       to    control.            And,    as   a

prerequisite     to    awarding     any    §    1521       relief,       the    court    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     entities,      including        the       debtor,    are       sufficiently

protected.”            11     U.S.C.      §     1522(a)          (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.                                  It

granted     discretionary      relief     under      §    1521     and,    as    mandated,

                                          28
considered    the    question     of   sufficient         protection     under   §

1522(a).     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.                    Indeed, when

initially    faced   with    Jaffé’s        motion   to     amend,     the   court

described the inclusion of § 365 as “improvident.”                     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    applying       §   1522(a).         He   maintains      that    the

bankruptcy      court’s       “ruling     fundamentally         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      apply    in     the   foreign      main     proceeding.         (Emphasis

added).     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        violate    “the      most   fundamental

policies of the United States.”                  H.R. Rep. No. 109-31, pt. 1, at

109.     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     entities,    including             the   debtor,      are

sufficiently protected.”       11 U.S.C. § 1522(a).                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.                        11 U.S.C. §

1522(a).      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         for    application        of     a

balancing test.

                                     31
       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,   Congress     stated       that    it    intended     to

codify the Model Law.                See 11 U.S.C. § 1501(a).               And, in doing

so,    it   also   indicated            strongly   that     the    Model    Law,       and   the

accompanying        Guide          to     Enactment       issued      by        UNCITRAL      in

conjunction with its adoption of the Model Law, should inform

our interpretation of Chapter 15’s provisions.                             Indeed, Chapter

15    provides     that       “[i]n      interpreting       this    chapter,         the   court

shall consider its international origin, and the need to promote

an    application        of    this      chapter    that    is     consistent        with    the

application         of        similar        statutes         adopted           by     foreign

jurisdictions.”          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.”                         Guide to Enactment

¶ 158, at 347.           But it stresses that the Model Law makes “[t]he

‘turnover’     of     assets      to    the    foreign       representative           .   .    .

discretionary,”          adding    that    “the     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     as     § 1522. 4          According     to     the      Guide,    “The       idea


      4
          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                               that Congress
relied heavily on the language of the Model Law.                           One of the few

                                              33
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      legislation.”           Id.   ¶   161,     at    348

(emphasis added).      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.           Instead, Chapter 15, like the Model Law,

anticipates      the    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       the     district            court       correctly      interpreted

§ 1522(a)’s      sufficient      protection             requirement      as   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).                          And we also agree that

§ 1506    is    an     additional,       more          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,             based   largely    on    the

                                              35
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.           He       argues        that       the    court    dramatically

overstated      the    risk    to    the     Licensees’           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    balance       of    harms”    and       that      the   bankruptcy   court

correctly      “concluded      that,    without         §    365(n)     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.”                 They maintain that in light of the

bankruptcy       court’s       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.”                            In re Qimonda AG,

462 B.R. at 182.              The court recognized Jaffé’s claim that the

“application of § 365(n) [would] result in less value . . .

being realized by the Qimonda estate.”                         Id.     But it noted that

“Qimonda’s       patent       portfolio      [would]     by     no    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     non-U.S.        patents.”           Id.          Additionally,          the

bankruptcy      court     found     it    significant          that    “[a]pplication         of

§ 365(n)    .    .   .    [would     impose]       no   affirmative        burden      on    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   entities     that

Qimonda had previously promised not to sue.                        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    under      those      patents        would    have     broad-ranging      ill

effects.     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.”                             In re

Qimonda AG, 462 B.R. at 182-83.                     While the bankruptcy court

acknowledged that the Licensees had been unable “to identify

specific    Qimonda       patents       implicated        by     the    products     they

manufacture[d]      and    s[old],”      it      noted    that    the   lack   of    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.             Thus, although the

bankruptcy      court   could        not,   in      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,”       adding     that        “the    threat        of    infringement

litigation      can     be    as     damaging        as     an    actual        finding     of

infringement.”        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      to     re-license          Qimonda’s      patents      to   the

Licensees      on     RAND     terms,       arguing        that     it     would     provide

sufficient      protection      for     their       interests.           Of    course,     his

proposal -- first mentioned after the district court’s remand --

does weigh      in    his    favor    by    decreasing        the    Licensees’       holdup

risks.        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.                     We conclude

that   the   bankruptcy      court’s   findings    in     this   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.                     See In re Vitro

S.A.B.   de    C.V.,   701    F.3d   at    1069   (noting    in    the    course    of

affirming     a   bankruptcy      court’s      decision   not     to    enforce    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      States     of   cooperating      with    other       countries    in

providing     fair   and   efficient      insolvency      proceedings      for     such


                                          41
international businesses.                Consistent with its stated purposes,

Chapter      15     provides    for      the        ready    recognition        of    foreign

insolvency        proceedings,       see    11       U.S.C.     §     1517,     and    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    the

bankruptcy court, based on its application of § 1522(a).                               But in

doing    so,      we    understand       that,       by     affirming     the    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      interest      in    maintaining        their       right     to     use

intellectual        property     following        the   licensor’s          bankruptcy       and

that    to   deny     them      that    right     would    “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         threat      to    the     development          of    American

Technology.”        Id. at 2.

       In    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   to   the    Licensees       would     be   very     real,      impairing        the

“design       freedom         provided       [them]        by      the       cross-license

agreements.”         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)     analysis,       we     too       necessarily

                                             43
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.”                                    In re Vitro

S.A.B.       de    C.V.,     701         F.3d     1031,        1069     (5th       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     in    Part     IV    because        it   is

unnecessary dictum.




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