Sharper Image sued Consumer Reports over a bad review — then filed for Chapter 11

Sharper Image was founded in 1977 by Richard Thalheimer in San Francisco, originally selling office supplies before reinventing itself as a gadget retailer. Through its retail stores and iconic monthly catalog, it grew to 187 locations across 38 states. The company's defining product was the Ionic Breeze air purifier, which accounted for a significant share of revenue.

In 2002, Consumer Reports tested the Ionic Breeze and gave it a 'Fail' rating, saying it was not effective at removing particles from the air. Sharper Image sued the nonprofit for libel, seeking $80 million in damages. The lawsuit was dismissed, with the court ruling that Sharper Image had not shown the test was invalid or the statements false. Two years later, Consumer Reports warned that the Quadra air purifier model produced trace levels of ozone that could be dangerous. Sharper Image recalled the units and the negative publicity crushed sales.

Sales declined steadily from 2004 onward. The company lost money for three straight years. By February 2008, the stock had fallen to $0.29 a share and NASDAQ announced delisting. On February 20, 2008, Sharper Image filed for Chapter 11 bankruptcy with $251.5 million in assets, $199 million in debt, and only $700,000 in cash. All retail stores were closed by the end of 2008. The brand was sold at auction for $49 million and later licensed to third-party retailers.