Just weeks after exiting bankruptcy proceedings, Sears faces another legal obstacle this week after hardware company Stanley Black & Decker sued the struggling retailer for breach of contract and trademark infringement.
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In a suit filed in Manhattan federal court, Stanley Black & Decker alleges that Sears breached a limited licensing agreement to sell Craftsman-brand products by launching its own line of tools called the Craftsman Ultimate Collection.
The lawsuit claims Sears breached the terms of the licensing agreement and threatened to irreparably harm Stanley’s line of Craftsman tools by touting its “Craftsman Ultimate Collection” as “the real home of the broadest assortment of Craftsman."
Stanley Black & Decker, purchased the Craftsman brand for roughly $900 million in 2017, argues that the name could confuse customers.
As part of the deal, Sears was allowed to continue selling a limited assortment of Craftsman goods.
The legal action came less than one month after Sears exited bankruptcy proceedings. A bankruptcy court approved a $5.2 billion offer to buy the chain from Eddie Lampert, Sears’ former CEO, current chairman and largest shareholder.
Reuters was first to report the lawsuit.
Sears declared bankruptcy last fall after years of plunging sales and declining store traffic. Lampert said in a filing that his plan for Sears’ future included “a rightsized network of large format and small retail stores, digital assets and interdependent operating businesses.”
About 425 Sears and Kmart stores are expected to remain in operation. Hundreds of locations have closed in recent years.