Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC
United States Court of Appeals for the Seventh Circuit
686 F.3d 372 (2012)
Lakewood Engineering (Lakewood), which held patents and trademarks on box fans, licensed Chicago American Manufacturing (Chicago) to produce fans under those marks, with Chicago permitted to sell independently if Lakewood didn't purchase all the fans made. After creditors forced Lakewood into bankruptcy, the trustee sold Lakewood's business, including its patents and trademarks, to Sunbeam Products (Jarden) (plaintiff), and separately rejected the still-executory portion of the Chicago licensing agreement; Chicago nevertheless kept manufacturing Lakewood-branded fans, and the bankruptcy judge allowed this to continue on equitable grounds, prompting Jarden's appeal.
Whether, under § 365(g)(1) of the bankruptcy code, the rejection of a contract that has not been previously assumed constitutes a breach of the contract.