Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC
686 F.3d 372
| 7th Cir. | 2012Background
- Lakewood contracted CAM to manufacture and sell box fans bearing Lakewood patents and trademarks, with CAM shipping directly to retailers and Lakewood paying for completed fans.
- Lakewood, in financial distress, authorized CAM to sell the 2009 run for its own account if Lakewood did not purchase them.
- In Feb 2009 a trustee in Lakewood’s bankruptcy decided to sell Lakewood’s assets, including patents and trademarks, to Sunbeam/Jarden, which did not want CAM’s Lakewood-branded fans.
- Lakewood’s trustee rejected the CAM contract under §365(a); CAM continued manufacturing and selling Lakewood-branded fans, prompting Jarden’s adversary action.
- The bankruptcy court ruled the CAM contract was ambiguous but allowed CAM to continue using the Lakewood marks; the district court certified the appeal on the contract’s rejection and its effect.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does §365(g) termination end CAM's right to use Lakewood marks? | Jarden argues rejection ends CAM’s license rights. | CAM argues rejection is breach only and rights survive. | Rejection is breach but does not extinguish license rights. |
| Does Lubrizol apply to trademarks under §365(n) and §101(35A)? | Lubrizol-like reasoning should terminate IP licenses, including trademarks. | Trademarks are not within §101(35A)’s IP definition and §365(n) does not codify Lubrizol for trademarks. | Lubrizol does not govern trademarks; §365(n) does not affect trademark licenses. |
Key Cases Cited
- Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985) (licensee loses IP rights after rejection under Lubrizol)
- In re Exide Technologies, 607 F.3d 957 (3d Cir. 2010) (§365(n) neither codifies nor disapproves Lubrizol as applied to trademarks)
- Thompkins v. Lil’ Joe Records, Inc., 476 F.3d 1294 (11th Cir. 2007) (rejection is not rescission; contract remains)
- Toibb v. Radloff, 501 U.S. 157 (1991) (Bankruptcy Code standard is statutory, not equitable)
- NLRB v. Bildisco & Bildisco, 465 U.S. 513 (1984) (rejection does not compel specific performance)