In re The Singer Company

46 Collier Bankr. Cas. 2d. 962 (2000)

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In re The Singer Company

United States Bankruptcy Court for the Southern District of New York
46 Collier Bankr. Cas. 2d. 962 (2000)

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Facts

The Singer Company (Singer) (plaintiff) made and sold sewing machines in the United States and globally through affiliates including in Germany (Singer Germany) and Brazil (Singer Brazil). In 1983, Singer Germany sold specialized manufacturing equipment and a patent-pending sewing needle to Singer Brazil. The manufacturing equipment was designed to make that specific needle. Singer Germany installed and repaired Singer Brazil’s equipment as needed over time. In 1985, the United States granted Singer a patent for the needle, which Singer assigned to Singer Germany. Singer Brazil manufactured the needle continuously from 1983 to 1999. In 1994, Dyno Corporation became Singer Brazil’s sole needle distributor in the United States. In 1999, Groz Beckert KG (Groz), a German company, bought some of Singer Germany’s assets, including the needle patent. In 1999, Singer and its affiliates, including Singer Brazil, filed for bankruptcy, triggering an automatic stay under the Bankruptcy Code. While Singer’s bankruptcy action was pending, Groz sued Dyno, seeking to enjoin Dyno from selling needles produced by Singer Brazil, claiming that Singer Brazil was infringing Groz’s needle patent. Singer filed an action against Groz and Dyno, asking the bankruptcy court to declare that Groz’s lawsuit violated the automatic stay. Singer argued that by not naming Singer Brazil in its complaint, Groz was trying to circumvent the Bankruptcy Code’s automatic-stay provision because Singer Brazil was the real party in interest as the alleged patent infringer. Groz filed a motion to dismiss Singer’s complaint, claiming that its lawsuit was not covered by the automatic stay because it was between Dyno and Groz.

Rule of Law

Issue

Holding and Reasoning (Lifland, J.)

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