## Facts

- Beanstalk Group, Inc. acted as a licensing agent for owners of intellectual property.
- In 1997, Beanstalk and AM General Corporation executed a “Representation Agreement” appointing Beanstalk as AM General’s exclusive nonemployee representative to market and license HUMMER-related intellectual property.
- The agreement defined the covered “Property” broadly to include HUMMER-related names, symbols, designs, logos, copyrights, trademarks, and ancillary rights.
- Beanstalk was entitled to a 35% commission on “gross receipts” received on AM General’s behalf under qualifying “License Agreements” made during the contract term.
- A “License Agreement” was defined as any agreement or arrangement, “whether in the form of a license or otherwise,” granting merchandising or other rights in the Property; contemplated payments were to be made to Beanstalk on AM General’s behalf, with quarterly accounting.
- The agreement contained an integration clause and gave AM General absolute discretion to veto any proposed license.
- In 1999, AM General entered a transaction with General Motors Corporation under which GM acquired the HUMMER trademark.
- Beanstalk claimed this transaction was, in substance, a “license agreement” (or equivalent arrangement) granting rights in the HUMMER mark and sought a 35% commission tied to the trademark’s value within the consideration paid to AM General.

## Issues

1. Whether the AM General–GM transaction transferring the HUMMER trademark fell within the Representation Agreement’s definition of a “License Agreement” or equivalent “arrangement” granting rights in the Property.
2. Whether Beanstalk stated a viable breach-of-contract claim for commissions based on that transaction, given the contract’s text, structure, and commercial purpose.

## Decision

- The Seventh Circuit affirmed dismissal under Rule 12(b)(6).
- The court held the AM General–GM transaction was not a “License Agreement” (or comparable merchandising-rights arrangement) within the meaning of the Representation Agreement.
- Because the contract did not cover commissions on a corporate-level transfer or sale of the trademark itself, Beanstalk failed to state a claim for a 35% commission on any portion of the consideration paid by GM.

## Legal Principles

- Contract terms are not read in isolation; the instrument must be interpreted as a whole, with particular clauses informed by surrounding provisions and the agreement’s structure.
- Courts will not adopt a literal reading of contractual language when it would yield commercially unreasonable or absurd results that rational contracting parties likely did not intend.
- A contract for trademark merchandising licensing commissions does not extend to a sale or transfer of the trademark absent clear contractual language tying commissions to such a disposition.
- On a Rule 12(b)(6) motion, a court may consider a contract attached to the complaint without converting the motion to one for summary judgment.

## Conclusion

The Seventh Circuit construed the Representation Agreement as a merchandising-licensing agency contract and held that a later transaction transferring the HUMMER trademark to GM was not a covered “license agreement,” so Beanstalk was not entitled to commissions and its complaint was properly dismissed.


Beanstalk Grp., Inc. v. AM Gen. Corp., 283 F.3d 856 (7th Cir. 2002)