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

686 F.3d 372 (7th Cir. 2012)

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Nature of the Case

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Facts

Lakewood Engineering & Manufacturing Co. made and sold a variety of consumer products, which were covered by its patents and trademarks. Lakewood contracted their manufacture to Chicago American Manufacturing (CAM). Lakewood was not doing well financially. As part of the deal to help CAM guard against problems with Lakewood’s finances, CAM was authorized to sell the products for its own account if Lakewood did not purchase them. Three months into the contract, Lakewood's creditors filed an involuntary bankruptcy petition against it. The court appointed a trustee, who decided to sell Lakewood's business. Sunbeam Products, (Jarden (P)) bought the assets, including Lakewood's patents and trademarks. P did not want the Lakewood-branded fans CAM had in inventory, nor did it want CAM to sell those fans in competition with P's products. Lakewood's trustee rejected the executory portion of the CAM contract under §365(a). When CAM continued to make and sell Lakewood-branded fans, P filed this adversary action. The bankruptcy judge held that CAM could continue making the Lakewood fans through the remaining term of the agreement on equitable grounds. P appealed and the district court certified the case for direct appeal to the Court of Appeals for the Seventh Circuit under 28 U.S.C. §158(d)(2)(A). P contends that CAM had to stop making and selling fans once Lakewood stopped having requirements for them.