12/10/2012 12:38:00 PM EST
Supreme Court Will Not Hear Case of Trademarks Being Used After Asset Sale
WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court
today declined to hear arguments in a case in which a company that had
purchased a debtor's trademarks at an asset sale argued that those trademarks
were being infringed upon by a third party that continued selling products
under the debtor's name (Sunbeam Products Inc. v. Chicago American
Manufacturing LLC, No. 12-431, U.S. Sup.).
In 2009, creditors of Lakewood Engineering &
Manufacturing Co. (LEM) filed an involuntary bankruptcy against the company in
the U.S. Bankruptcy Court for the Northern District of Illinois.
LEM, which made and sold a variety of consumer products,
had a business contract with Chicago American Manufacturing (CAM). The
contract authorized CAM to use LEM's patents and put its trademarks on
Sunbeam Products bought LEM's assets, including its
patents and trademarks, at an asset sale; however, Sunbeam did not want an
inventory of box fans that bore the LEM trademark and were made under contract
with CAM. Moreover, Sunbeam did not want CAM to sell the fans in
competition with Sunbeam's products.
Nevertheless, CAM continued to make and sell the fans and
Sunbeam filed an adversary proceeding against CAM in the Bankruptcy Court.
The Bankruptcy Court held that the contract in question
was ambiguous but said that based on extrinsic evidence, it concluded that CAM
was entitled to make and sell as many fans as it had agreed to under its
contract with LEM. Sunbeam appealed to the U.S. District Court for the
Northern District of Illinois.
Sunbeam appealed to the Seventh Circuit U.S. Court of Appeals. A panel of
the Seventh Circuit said CAM was permitted to continue using LEM's trademarks
on "equitable grounds," but the panel did not decide whether a contract's rejection
under 11 U.S. Code Section 365(a) ends the licensee's right to use the
Sunbeam filed a petition for a writ of certiorari
with the U.S. Supreme Court on Oct. 5, seeking a decision on the question which
the Seventh Circuit left unanswered.
Sunbeam had argued that there is an intercircuit conflict
regarding whether a licensee retains the ability to use a debtor's trademarks
after the corresponding intellectual property license is rejected in a
LEM is represented by Scott R. Clar of Crane Heyman Simon
Welch & Clar in Chicago. Sunbeam is represented by Joseph D. Frank of
Frank/Gecker in Chicago and Leonard J. Feldman of Stoel Rives in Seattle.
CAM is represented by William John Barrett of Rack Ferrazzano Kirschbaum &
Nagel-Berg in Chicago, Richard M. Hoffman of Northbrook, Ill., and David B.
Goroff of Foley & Lardner in Chicago.
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