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Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC

United States Court of Appeals for the Seventh Circuit
686 F.3d 372 (2012)


Lakewood Engineering & Manufacturing Co. (Lakewood) (debtor) was a manufacturer that held patents and trademarks on box fans. Lakewood entered into an agreement with Chicago American Manufacturing (Chicago) for Chicago to produce fans using Lakewood’s patents and trademarks. The agreement required Chicago to ship the fans to Lakewood’s customer, based upon Lakewood’s instructions. The agreement also allowed Chicago to sell the fans independently if Lakewood failed to purchase all of the fans. Three months after the agreement, a group of Lakewood’s creditors filed an involuntary bankruptcy petition against Lakewood. The bankruptcy trustee sold the Lakewood business, which included the trademarks and patents, to Sunbeam Products, d/b/a Jarden Customer Solutions (Jarden) (plaintiff). The trustee rejected the executory portion of the agreement with Chicago, but Chicago continued to make Lakewood-branded fans. Jarden brought an adversary action in bankruptcy court. The bankruptcy judge held that Chicago could continue making the Lakewood branded fans through the remaining term of the agreement on equitable grounds. Jarden appealed to the district court, and the district court certified the case for direct appeal to the Court of Appeals for the Seventh Circuit.

Rule of Law


Holding and Reasoning (Easterbrook, C.J.)

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