Stanley Black and Decker — a global tool manufacturer that sells under multiple brands including Craftsman — is suing Sears for the alleged breach of a trademark license agreement related to the iconic Craftsman brand.
"The longer the Craftsman Ultimate Collection is permitted to be advertised, marketed and commercialized by New Sears, the greater the harm that this unlawful sub-brand will impose on the reputation, value and prestige of the Craftsman brand in the marketplace and on Stanley's ability to control its brand in the future," according to the lawsuit.
This move is in response to Sears' release last month of the Craftsman Ultimate Collection, a tool set deeming Sears as "the real home" of the brand. Given Stanley sells Craftsman products through other channels, including other retailers like Lowe's and Ace Hardware, the company is arguing that the marketing could lead consumers to believe that Craftsman products sold outside of Sears are illegitimate.
Two years ago, Sears unloaded the iconic tool brand for more than $900 million. At the time, some retail insiders speculated whether spinning off of one of the retailer's best assets would be the final nail in the coffin. Amid its growing financial struggles, Sears did end up filing for bankruptcy, but now it's back with Eddie Lampert in charge again. And he's looking to cash in wherever the department store retailer still has brand loyalty.
Craftsman certainly has that. It's one of the best known American brands and has stood the test of time since Sears first registered the trademark in 1927, serving as a staple of American workshops and garages. But, over the last two years, Stanley has worked to broaden the brand beyond the confines of Sears stores. That makes Sears' new marketing message a contentious one.
After tumultuous bankruptcy proceedings that left unsecured creditors testy, a bankruptcy judge in February approved Sears' $5.2 billion sale to Lampert and his hedge fund. So far, early indications for future strategy has hinged on smaller stores, less apparel and more appliances and tools. Throughout the sale process, Sears executives also continued to bank on its Shop Your Way loyalty program for growth.
Litigation early on in the company's rebirth doesn't look good, and this isn't the only dispute at hand. The new Sears, known as Transform Holdco, is also sparring with the old Sears, claiming in court documents filed Wednesday that it intentionally delayed payments to vendors and shortchanged it on inventory. The new Sears is calling for a mediator to settle the matter.
With litigation clouding the company's first moves post-bankruptcy, it remains to be seen just where the company will fit in to the retail landscape and consumers minds.