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L.G.B. INC. v. GITANO GROUP

May 17, 1991

L.G.B. INC., PLAINTIFF,
v.
THE GITANO GROUP, INC., G.V. GITANO, INC. AND G.V. LICENSING, INC., DEFENDANTS.



The opinion of the court was delivered by: Whitman Knapp, District Judge.

OPINION & ORDER

This litigation arises from a dispute between a licensor and its licensee over the right to use the "Gloria Vanderbilt" trademark (the "Mark") on women's swimwear, sweaters, and activewear. The parties first appeared before us on September 12, 1989 shortly after the complaint was filed. However, later in the same month the parties advised us that they had entered into serious settlement negotiations and, at their request, all litigation activity was suspended for about fourteen months.

The matter is now before us on three separate motions: (1) defendant-licensor G.V. Licensing, Inc.'s ("Licensing") motion for a preliminary injunction prohibiting plaintiff from further use of the Mark during the course of the litigation; (2) plaintiff's motion for partial summary judgment on its claim that its licenses are exclusive; and (3) the motion of defendants Licensing, G.V. Gitano, Inc. ("G.V. Gitano"), and The Gitano Group, Inc. ("Group") to dismiss various claims asserted in the amended complaint.

This opinion will deal only with Licensing's motion for a preliminary injunction. For reasons that follow, that motion is denied because the inordinate delay in seeking such relief makes impossible a finding of irreparable harm.

BACKGROUND

I. Events Giving Rise to the Litigation.

Plaintiff obtained its licenses from the Mark's former owners, Murjani International Limited and its successor, Murjani Worldwide, B.V. (collectively, "Murjani"), pursuant to three agreements, each covering a different category of women's apparel. The first such agreement, dated May 18, 1984, covers swimwear and, on November 15, 1984, was expanded to include beachwear (the "Swimwear License"); the second, dated September 29, 1988, covers sweaters and coordinated sweater bottoms (the "Sweater License"); and the third, also dated September 29, 1988, covers performancewear and activewear, which include tennis, bicycle and warm-up suits (the "Activewear License"). The three twenty-plus page agreements drafted by Murjani are almost identical.

Among the numerous obligations imposed upon the plaintiff by these agreements are: that it obtain Murjani's written approval of garments bearing the Mark prior to their sale or distribution; that it maintain the distinctiveness of the Mark; that it — at the risk of termination — meet certain annual minimum sales levels, which levels ranged from $1 to $8 million, depending on the license and on the particular annual period; and that it spend a certain percentage of its revenue on advertising. ¶¶ 8.2, 8.3, 7.1 Each agreement also required that plaintiff pay annually a guaranteed minimum royalty to be credited against a quarterly percentage royalty, and that it deliver to Murjani quarterly royalty reports substantiating its calculations of the percentage royalty due and confirming that it has met its minimum sales requirements.

According to plaintiff, Murjani never strictly enforced these requirements, and licensor and licensee enjoyed an amiable and successful collaboration from the inception of their relationship in May of 1984, until on or about December 23, 1988, when Murjani sold the Mark to defendant G.V. Gitano and assigned to it all of its rights under various licensing agreements, including those entered into with plaintiff. G.V. Gitano later changed its name to G.V. Licensing, Inc. For ease of reference, we will refer to it as "Licensing."

When Licensing took over as plaintiff's licensor, an increasingly discordant relationship ensued. On February 3, 1989, Licensing notified plaintiff that it had begun "formulating [its] overall licensing and marketing strategies." Exh. A, Sneider Feb. 25 Affid. These "strategies" apparently included a decision to assert that the licenses plaintiff had obtained from Murjani were non-exclusive. Concurrently, Licensing began requiring strict compliance with the terms of the various agreements, and set forth with particularity the procedures by which plaintiff was to effect such compliance. See Exh. 23 to Albert Reply Affid. Plaintiff — to an extent not possible to determine on this record — failed so to comply. It opposed Licensing's stated position that the licenses were non-exclusive, and claimed, among other things, that Licensing had improperly rejected garments it had submitted for approval.

A letter dated July 27, 1989 sent by Licensing to Luis Sneider, plaintiff's chief executive officer, illustrates the tenor of the escalating conflict between the two entities:

    After reviewing the bathing suits and the
  "Swimwear" line list received on July 13 as a result
  of our meeting at your offices, we are unable to
  process your "Swimwear" submission.
    As previously noted, we can not make an approval
  decision without a complete representation of a
  season's line. During our visit to your office and
  warehouse, we saw numerous garments containing the
  "Beachwear" Gloria Vanderbilt label. However, no such
  items were submitted for approval. As we have told
  you in the past, until we receive samples (and
  completed approval forms) that represent the entire
  Fall '89 Swimwear line (which includes coordinated
  cover-ups), you may not sell or offer for sale any
  such items — they must be submitted first for
  approval.
    Also, I received a copy of your letter dated July
  10, 1989. . . . In it you made reference to ...

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