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Oscar De La Renta, Ltd. v. Mulberry Thai Silks

April 17, 2009

OSCAR DE LA RENTA, LTD., PLAINTIFF,
v.
MULBERRY THAI SILKS, INC. D/B/A MULBERRY NECKWEAR, DEFENDANT.



The opinion of the court was delivered by: Richard J. Sullivan, District Judge

MEMORANDUM AND ORDER

Plaintiff Oscar de la Renta, Ltd. is represented by Richard Tashijan, Bradley M. Rank, and Howard Raber, Tashijan & Padian, 15 West 36th Street, 15th Floor, New York, New York 10018. Defendant Mulberry Thai Silks, Inc. is represented by Joseph E. Peterson and Robert Potter, Kilpatrick Stockton LLP, 31 West 52nd Street, 14th Floor, New York, New York 10019, and Lawrence J. Siskind and Matthew A. Stratton, Harvey Siskind LLP, Four Embarcadero Center, 39th Floor, San Francisco, California 94111.

Plaintiff Oscar de la Renta, Ltd. ("ODLR") brings this action alleging claims for trademark infringement and unfair competition pursuant to the Lanham Act, 15 U.S.C. § 1051 et seq., as well as state law claims for unfair competition and breach of contract, against Defendant Mulberry Thai Silks, Inc. ("Mulberry").

Specifically, ODLR alleges that, by failing to pay agreed-upon royalties, Mulberry breached a license agreement (the "License Agreement") for use of ODLR's trademark. ODLR further alleges that Mulberry continued using the trademark following ODLR's termination of the License Agreement. (Compl. ¶¶ 39, 44-45, 51-53, 57- 58.) ODLR seeks injunctive relief as well as liquidated damages for Mulberry's breach of the License Agreement, treble damages based on Mulberry's profits from the sale of infringing items, punitive damages, and attorney's fees. (Id. ¶¶ A-G.)

Before the Court is ODLR's motion, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for summary judgment on its breach of contract claim. Mulberry requests that the Court deny the motion as premature, or in the alternative requests, pursuant to Rule 56(f), to be permitted sixty days to conduct additional discovery before the Court resolves ODLR's motion for summary judgment.

For the reasons set forth below, Mulberry's request for discovery is denied, ODLR's motion is granted, and the Court awards ODLR damages in the sum of $1,034,417.11.

I. BACKGROUND

A. Facts

The following facts are taken from the pleadings, the Local Rule 56.1 statements submitted by the parties, and the affidavits and exhibits submitted in connection with this motion. Where only one party's Rule 56.1 statement is cited, the opposing parties do not dispute that fact or have offered no admissible evidence to controvert that fact. Citations to additional facts in the Discussion section follow the same conventions.

ODLR is a New York company engaged in the business of designing clothing and accessories for both men and women. (Pl.'s 56.1*fn1 ¶¶ 1, 4.) Mulberry is a California company that, prior to the acquisition of certain of its assets by the Phillips Van Heusen Company ("PVHC"), was engaged in the manufacture and distribution of men's neckwear. (Id. ¶¶ 3, 5.)

On April 16, 2007, ODLR and Mulberry entered into the License Agreement. (Id. ¶ 6.) The License Agreement granted Mulberry the exclusive right over a term of five years, beginning at execution and terminating December 31, 2012, to use ODLR's "O Oscar" trademark for the manufacture and distribution of men's neckwear. (Id. ¶¶ 9, 11; see also Affidavit of Alexander L. Bolen ("Bolen Aff.") Ex. B, License Agmt. ¶ 3.1.) The License Agreement provided that it could "not be assigned, sold or transferred voluntarily or by operation of law by the LICENSEE, or its shareholders." (Bolen Aff. Ex. B, License Agmt. ¶ 13.3.1; see also id. ¶ 2.1.) The License Agreement further provided for quarterly royalty payments of 8% of Mulberry's net sales of items produced under the License Agreement, with guaranteed minimum quarterly royalty payments by Mulberry to ODLR in amounts that escalated over the life of the contract: $15,625 quarterly in the first year of the contract, $43,750 quarterly in the second, $56,250 quarterly in the third, $68,750 in the fourth, and $81,250 in the fifth. (Id. ¶¶ 8.2.1- 8.2.5.) Failure to make a required payment constituted a default under the License Agreement. (Id. ¶¶ 8.1, 13.1.1.) ODLR retained the right to terminate the License Agreement should Mulberry fail to make a payment due under the terms of the agreement and should such failure remain uncured five days from Mulberry's receipt of written notification of the default. (Id. ¶¶ 8.3, 13.1.1.) In addition, the License Agreement contained a provision stating that:

In the event this Agreement is terminated by LICENSOR . . . prior to the expiration of the TERM by reason of LICENSEE's default hereunder . . . LICENSOR shall be entitled to retain all minimum royalties previously paid, to collect and retain all minimum royalties due as of the date of such termination, and, to receive immediately all minimum royalty installments . . . that are due and payable for the remaining TERM of this Agreement . . . . The parties agree that the amounts so payable are as unmitigable liquidated damages; [sic] not as a penalty.

(Id. ¶ 14.2.)

Following the execution of the License Agreement, Mulberry commenced production of neckwear using the "O Oscar" trademark. (Pl.'s 56.1 ¶ 10.) Mulberry made the first two payments due under the terms of the License Agreement. (Id. ¶ 20.) Mulberry made no payment on April 1, 2008. (Id. ¶ 23; Def.'s 56.1 ¶ 23.)

By letter dated April 18, 2008, ODLR advised Mulberry that it had not received a royalty payment on April 1, 2008, and that a default under Section 13.1 of the License Agreement entitled ODLR to terminate the agreement immediately. (Pl.'s 56.1 ¶ 24; Def.'s 56.1 ¶ 24.) Mulberry received the April 18, 2008 letter, but made no payment to ODLR. (Pl.'s 56.1 ¶¶ 26-27; Def.'s 56.1 ¶¶ 26-27.) By ...


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