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Law

Legal Roundup

Here’s a screenshot of three deals gone sour.

Playboy is enjoying a $7 million unanimous verdict in a breach-of-contract lawsuit against Play Beverages and CirTran Beverage. The jury found that the two companies (they have the same principal, Iehab Hawatmeh) committed counterfeiting and willful trademark infringement by selling and marketing energy drinks using Playboy’s marks after their license had ended. The deal was first signed in Nov. 2006 with Play Beverages. It expired in 2012 after the manufacturer failed to meet the deal’s minimum sales target with consistent under-performance of sales and failure to pay royalties. Breakdown of the damages: $1.6 million for breach of contract against Play Beverages, $5 million for trademark infringement against both, and $400,000 for trademark counterfeiting against both. (This case was brought in the Circuit Court of Cook County, Illinois.)

Fashion designer Nanette Lepore is suing Bluestar Alliance for breach of contract, alleging that the brand management company used her brand to produce a number of “shoddy, defective, and inferior products” without her approval. Two years ago, the New York-based company signed a deal with Lepore to license her brand. Together, they formed the holding company NL Brand Holdings with Lepore as Creative Director—another point of contention, as Bluestar soon fired her from the role. While Lepore retained control over her brand for the high-end fashion line, Bluestar handled her diffusion lines. The company allegedly attempted to terminate their license agreement, which would allow it to use Lepore’s name without restriction. Lepore is seeking $735,000 in damages, plus punitives.

In a tragic case involving the asphyxiation death of a child by a crib bumper pad, a federal district magistrate judge has ruled that a licensor who didn’t make or sell the product can still be held liable for damages as an “apparent manufacturer.” The Garanimals-branded bumper pad was licensed by Garan; sold by Wal-Mart; and licensed to Triboro Quilt Manufacturing—all are defendants in this suit. While the court said Garan can’t be liable for some charges—breach of express warranty, fraud by concealment, and violation of the Virginia Consumer Protection Act—it allowed for claims of negligence, breach of implied warranties, negligent misrepresentation, wrongful death, and punitive damages to go forward. (Virginia law governs here; see Micjan v. Wal-Mart Stores, Inc., W.D. Pa., No. 14-855, 8/4/16.)

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