french connection ltd v. tpr holdings - fcuk.pdf

7/23/2019 French Connection Ltd v. TPR Holdings - FCUK.pdf

http://slidepdf.com/reader/full/french-connection-ltd-v-tpr-holdings-fcukpdf 1/22

T

JS 44C/SDNY

REV.

4/2014

JUDGEH :

The JS-Wt

pleadings

Judicial

initiating

PLAINTIFFS

FRENCH CONNECTION

LIMITEC

LERSTEIN

CIVIL C O V E R

SH EET

li W

7976

civil

cover

sheet

and the information

contained

herein neither

replace

nor supplement the filing and service of

or

other

papers

as

required by law, except

as

provided by local rules of court . This form,

approved

by th e

Conference ofthe UnitedStates inSeptember 1974, isrequired for use ofthe Clerk ofCourtforthe purpose

tpe civil docket sheet .

DEFENDANTS

TPR HOLDINGS

LLC

O T

0 9 2

ATTORNEYS (FIRM NAME, ADDFlESS, AND TELEPHONE NUMBER

BAKER & MCKENZIELLP, 452 F

FfTH

(212)

AVE.

NEW

YORK, NY

10018

26-4100

ATTORNEYS

(IF KNOWN)

DAVID ZASLOWSKY

CAUSE

OF ACTION(CITETHE U

(DONOTCIT

CIVIL STATUTE UNDER WHICH

YOU

ARE FILING

AND

WRITE A BRIEF STATEMENT

OF

CAUSE)

JURISDICTIONAL STATUTES UNLESS DIVERSITY)

Thisaction involves a federal dji^estion underthe Lanham Act, 15 U.S.C.

1051

et seq., and diversity

jurisdiction

under28

U.S.C.

§ 1332.

rfg, or

one essentially

the same

been

previously filed n

SDNY at

any time? NoZJ/esI—budge Previously

Assigned

| | Dismissed. No [~J Yes Q

If

yes, give date &Case

No.

No 0 Yes •

Has this action, case, or

proceedii

If yes,was thiscase Vol.Q

Invo

ISTHISAN INTERNATIONAL ARBITRATION

PLACEAN[x] INONE BOXONLY

TORTS

NATURE OF SUIT

ACTIONS UNDER STATUTES

INJURY

AIRPLANE

AIRPLANE PRODUCT

LIABILITY

ASSAULT,

LIBELS

J LANDER

FIIDERAL

EMPLOYERS'

LIABILITY

PERSONAL INJURY

[ J367 HEALTHCARE/

PHARMACEUTICAL

PERSONAL

, , 625 DRUG

RELATED

INJURY/PRODUCT LIABILITY

[ ] 365 PERSONAL INJURY

PRODUCT LIABILITY , , RQn nTHFR

[ ]

368 ASBESTOS

PERSONAL ' ' 69°

0THER

INJURY PRODUCT

LIABILITY

PERSONALPROPERTY

[ ] 370 OTHER FRAUD

[ ]371 TRUTH IN LENDING

FORFEITURE/PENALTY

BANKRUPTCY

[ ]422 APPEAL

28 US C

15 8

[ ) 423 WITHDRAWAL

28 USC 15 7

I

1110

[ ]120

11130

[

1140

I

1150

I ] 1 51

[ ] 1 52

[

]153

[

]160

[ ]190

[ ]195

[ ]196

INSURANCE

MARINE

MILLER ACT

NEGOTIABLE

INSTRUMENT

RECOVERY

OF

OVERPAYMENT &

ENFORCEMENT

OF JUDGMENT

MEDICARE ACT

RECOVERY

OF

DEFAULTED

STUDENT LOANS

(EXCL VETERANS)

RECOVERY

OF

OVERPAYMENT

OF VETERAN'S

BENEFITS

STOCKHOLDERS

SUITS

OTHER

CONTRACT

CONTRACT

PRODUCT

LIABILITY

FRANCHISE

3 4 0M\ 3 INE

3 4 5M ^ I N

36 0

36 2 P

M

E

PRODUCT

LIABILITY

MDTOR

VEHICLE

MDTOR

VEHICLE

F RODUCT

LIABILITY

OTHER PERSONAL

INJURY

RSONAL INJURY -

ED

MALPRACTICE

UNDER STATUTES

IT S

ACTIONS

CIVIL

RIG

[ ]440 OTHER CIVILRIGHTS

i

Non-Prisoner)

)441 VCTING

[ ) 442 EMPLOYMENT

\ i

443 HCUSING/

ACCOMMODATIONS

[ ] 445AMERICANS WITH

SABILITIES-

k/IPLOYMENT

[ ]

446

AMERICANS WITH

SABILITIES

-OTHER

[ ]448 t0UCATION

REAL

PROPERTY

[

1210

[ J

220

[ J 230

[

]240

[ ]245

[ ]290

LAND

CONDEMNATION

FORECLOSURE

RENT LEASE &

EJECTMENT

TORTS

TO LAND

TORT

PRODUCT

LIABILITY

ALL

OTHER

REAL PROPERTY

Checkif

em n e

in complai

i f:

CHECK IFTHIS IS

ACLA B

ACTION

UNDER

F.R.C.P . 23

[ ] 380 OTHER PERSONAL

PROPERTY

DAMAGE

[ ] 385 PROPERTY DAMAGE

PRODUCT LIABILITY

PRISONERPETITIONS

[ ] 463 ALIEN DETAINEE

[ ) 510 MOTIONSTO

VACATE SENTENCE

28

US C

2255

[ J530 HABEAS CORPUS

[ ] 635 DEATH PENALTY

[ ] 5 40 MANDAMUS &OTHER

PRISONER CIVIL RIGHTS

[ ] 550 CIVILRIGHTS

[ ] 555 PRISON CONDITION

[ ] 560 CIVILDETAINEE

CONDITIONS OF CONFINEMENT

SEIZURE OF PROPERTY

21 U SC 8 81

LABOR

[ ] 710 FAIRLABOR

STANDARDS ACT

[ ] 720 LABOR/MGMT

RELATIONS

[ ] 7 40

RAILWAY

LABORACT

[ ] 751

FAMILY MEDICAL

LEAVE ACT (FMLA)

[ ]790 OTHER LABOR

LITIGATION

[ ]791 EMPLRET INC

PROPERTY RIGHTS

[ ] 820 COPYRIGHTS

[ ] 830 PATENT

fc] 840 TRADEMARK

SOCIAL

SECURITY

[ ]861 HIA(1395ff)

[ ] 862 BLACKLUNG(923)

[ ] 863 DIWC/DIWW (405(g))

[ ]864 SSID TITLEXVI

[ ] 865 RSI (405(g) )

FEDERAL

TAX SUITS

[ ] 870 TAXES (U.S. Plaintiffor

Defendant)

[ ]871 IRS-THIRD PARTY

26 US C 7609

SECURITY ACT(ERISA)

IMMIGRATION

[ ] 462 NATURALIZATION

APPLICATION

[ ]465 OTHER

IMMIGRATION

ACTIONS

OTHER STATUTES

I I 375 FALSE CLAIMS

[ ]400 STATE

REAPPORTIONMENT

[ ] 410 ANTITRUST

[ ]430 BANKS&

BANKING

[ ] 450 COMMERCE

[ J460 DEPORTATION

[ ] 470 RACKETEER INFLU

ENCED & CORRUPT

ORGANIZATION ACT

(RICO)

( ] 480 CONSUMER CREDIT

[ ]490 CABLE/SATELLITET

[ ] 850 SECURITIES/

COMMODITIES/

EXCHANGE

] 890 OTHER STATUTORY

ACTIONS

J 891 AGRICULTURALACT

] 893 ENVIRONMENTAL

MATTERS

] 895 FREEDOM OF

INFORMATION ACT

] 896 ARBITRATION

) 899 ADMINISTRATIVE

PROCEDURE

ACT/REVIEW

APPEAL

OF

AGENCY DEC

[ ] 9 50 CONSTITUTIONALIT

STATE STATUTES

•

DEMAND

$

OTHER

DO YOU CLAIM THIS CASE IS RELATED TO A CIVILCASE NOW PENDING INS.D.N.Y.?

JUDGE DOCKET NUMBER

n theck YES

onlyifdemandedincompl:

JURY DEMAND:

DYES

lxjN

NOTE: You must also submit at the time offilingthe

Statement

of Relatedness form (Form IH



PLACE AN x INONEBOXONLY

S 1 Original • 2

Proceeding state

| | 3.

all

paft

Remo

/isd from

Court

:ies

represented

O RI G I N

D 3

Remanded

D 4 Reinstated or

from

Reopened

Appellate

Cour t

| I 5 Transferred from LJ 6

Multidistrict

(Specify District) Litigation

I I 7 Appeal toDistri

Judge

from

Magistrate Jud

Judgment

I | b.

At Hast

one

party

i

PLACEAN X INONEBOXONLY

• 1 U.S. PLAINTIFF Q2 U

pr o

s e .

BASIS

OF

JURISDICTION

DEFENDANT

[x] 3

FEDERAL QUESTION

• 4

DIVERSITY

(U.S. NOT A PARTY)

IFDIVERSITY INDIC TE

CITIZENSHIP ELOW

TIZENSHIP OF PRINCIPAL PARTIES

(FOR

DIVERSITY

CASES

ONLY)

Plaintiff and on e

box

for

Defendant)Place

an [X]in one box fo

CITIZEN

OF THIS

STATE

CITIZEN OF ANOTHER STATE [ ]

PT F

[ ]1

DE F

[ ]1

[ ]2

CITIZEN OR SUB JECT OF A

FOREIGN COUNTRY

INCORPORATED

or PRINCIPAL PLACE

OF BUSINESS IN

THIS STATE

PLAINTIFF(S)

ADDRESS(ES)

f NDCOUNTY(IES)

LIMITED

RENCH CONNECTION

20-22 BED FORD ROW

LONDON

WC1R4 JS

ENGLAND

DEFENDANT(S)

ADDRESS(E ) AND

COUNTY(IES)

TPR HOLDINGS LLC

950 THIRD AVENUE

3RD

FLR

NEW YORK, NEW YORK, 10022

PT F DE F

M 3 [ ] 3

[ ] 4 [

*4

INCORPORATED an d

PRINCIPAL

PLACE

OF BUSINESS

IN

ANOTHER STATE

FOREIGN NATION

PT F DE F

I ]5 [ ]5

[ ]6 [ ]6

DEFENDANT(S) ADDRESS

REPRESENTATION IS

RESIbENCE

ADDRESSES OF

L

NKNOWN

HEREEY MADETHAT, AT THIS TIME, I HAVE BEEN UNABLE, WITH REASONABLE DILIGENCE, TO ASCERTAIN

THE FOLLOWING DEFENDANTS:

Check one: T HI S A C TI O N

(DO NOT check ei

COMPLAIN

DATE

siq(NA\ru

EiHOULD

BE

ASSIGNED TO: • WHITE PLAINS [x] MANHATTAN

box

if this a

PRISONER

PETITION/PRISONER CIVIL RIGHTS

RECEIPT

#

Magistrate

Judge is to be

Magistrate

Judge

designated bythe Clerk ofthe Court.

MAG. JUDGE FRANCIS

Ruby

J.

Krajick,

Clerk ofC^jjrt by

UNITED

STATES

DISTRICT

(tpURT

(NEW

YORK SOUTHERN)

Deputy Clerk, DATED.

ADMITTED TO PRACTICE

IN

THIS DISTRICT

I NO

M YES (DATE ADMITTED

Mo.Ju'y Yr.

1985 )

Attorney Bar Code # DZ-5182

is so

Designated.



JU GE HELLERSTEIfil

David Zaslowsky

BAKER & McKEjNfelE LLP

Attorneys for Plaimiff

French Connection Limited

452 F if th Avenue

New York, New Yckk 10018

Tel: (212)

626-4100

UN ITED STATES

SOUTHERN DISTRICT

French Connec tion

-aga:

TPR

Holdings LLC

DISTRICT

COURT

OF NEW YORK

Limited,

Plaintiff,

hst-

(f/k/a Zirh Holdings LLC),

Defendant.

15 7976

CASE

NUMBER:

COMPLA INT

Plaintiff French Connection Limited (hereinafter Plaintiff or French Connection ), by

. McKenzie LLP, for its complaint against Defendant TPR Holdings LLC

Defendant

or TPR ), alleges as follows: , Z

its attorneys Baker

(hereinafter

1.

French

Wales

wi th

2. Upon

of

New York

York, NY

1

3. The c ou rt

U.S.C.

§§ 1

L anh am A c

pursuant

to

Connection is a corporation organized and existing under the laws ofEngland and

is principal place

of

business in London, England,

information andbelief, TPR is a corporation organized and existing underthe laws

and has its principal place of business at 950 Third Avenue, 3rd Floor,

New

0022.

h is

original jurisdiction over the subject matter of this action pursuant to 28

3^31 and 1338(a) as this action involves a federal

question

pursuant to the

15 U.S.C. 1051 et seq. This court also has jurisdiction over the claims

M U.S.C. § 1332, diversity

of

citizenship, and 28 U.S.C. § 1367, the amount



in controversy

and a

ci t izen

4. TPR resides

the

License

accordance

exclusive

B ac k ground

5. French Connection

appealed to

6.

French

Connect ion

7.

French

FCUK

production

8.

French

exceeding $75,000 and Defendant and Plaintiff being a citizen of a State

of a foreign state, respectively.

in this district. Venue is proper under 28 U.S.C. §

1391

and Section 17.2 of

which expressly provides that it shall be subject to and interpreted in

ddtli New York law, and the Parties consent to and subject themselves to the

jurisdiction of the federal courts within New York.

was founded in 1972 to create well-designed, stylish clothing that

broad

market .

Con; lect ion

on has since worked hard to build on that vision and as a result, French

synonymous with fashion and style.

is the registered proprietor of the FRENCH CONNECTION and

(the Licensed Marks ) and brand names and is engaged in the design,

distribution

of

branded fashion clothing.

ion's long history of success has been based on design quality and

fashion, supportedby a strong market presence resulting in one of the most

and respected clothing brands in the UK and across the world,

has retail stores in various countries around the world selling clothing

products,

^cognizedFRENCH CONNECTION and FCUKbrandshave been extended

into complementary licensed products including men's and women's

fragrances, shoes, watches, handbags, jewelry, and eyewear which together

ial license royalty income.

Connect ion

t rademarks

end

Connection';

innovative

highly recognized

9. French Conihbction

and complementary

10. Its globally

successfully

toiletries

and

generate sub stantial



11. These comp

mortar

retai

12. Upon information

products industry

opportunities

13.

Upon

information

cosmetics

14. Upon information

Licensed Mkk-ks

ementary products are sold pursuant to license agreements in brick-and-

stores and online shops by licensees, with approval

of

French Connection,

and belief, TPR is a NYC based investor and operator in the consumer

TPR's target investments include scalable mass and prestige

in the health, beauty and wellness categories.

and belief, TPR creates, develops, sells and distributes fragrance and

pf(>ducts.

and belief, TPR became interested in obtaining rights to use the

The License Agreement

15. French Connection and TPR entered into a written license agreement dated April 28,

Mcense )1 under which

French

Connection

licensed

certain of its intellectual

PR in exchange for royalty payments as well as other promises,

acknowledged in the License tha t the Licensed Marks were famous and valuable

associated with substantial goodwill in connection with various products.

acknowledges that the Licensed Marks are registered trademarks in the

classes identified in a Schedule A thereto, which makes up part of the

2010 (the

property to

16. TPR

and

17. The

License

t e r r i to r i es

License.

and

18.

Under

the

Ljibense, TPR obtained

the

right to use the FRENCH CONNECTION

mark

in

Canada and to use the FCUK mark throughout the world, with the exception

Kingdom and Republic of Ireland.

at its own expense, to develop, manufacture or assemble, sell, market,

a<|ifvertise and promote the Licensed Products. See Section 6.2, License.

the U S

and

o f

t he Unit ed

19. TPR agreed

distribute,

A copy of the License is annexed

hereto

as

Exhibi t

A.



£

0.

TPR

also aj

high quality

and o f such

ifeed to

perform its duties

and

obligations

to

develop Licensed Products

ofa

that are at least comparable to similar items offered at comparable prices,

^tyle,

appearance

and distinctiveness so asto

protect

and enhance, and in

no

adversely upon, the prestige

of

[Plaintiff] and the Licensed Marks and the

peftaining thereto. See Section 6.2(a), License.

Connection previouslycontractedwith a separate company to grant an exclusive

fr

United

Kingdom and Republic

of

Ireland for

the

creation,

development,

sale and distribution of the certain products listed in a Schedule B to the

manner ref lect

goodwill

21. French

l ic en se f or

manufacture

License.

22. TPR was made aware of this previous license as it is expressed in the License itself, and

through communications with French Connection.

Defendant s Breaches o f the License

23 . Section 9.1

The

due

particular

24. At th e t ime

payment foi

That royalty

25. TPR

has

(which was

26.

O f

th e 2 0

ro

27. Se ct io n 17

28. Under Sect idn

qfthe License provides for quarterly royalty payments of 4.5% of net sales.

for the royalty payments are within 30 days

of

the completion

of

the

(July 31, October 31, January 31

and

April 30).

the License terminated, TPR had failed to pay the last quarterly royalty

the Quarter ending January 2015 (that had been due as of March 2, 2015).

payment has sti ll not been made.

to pay the royalty for the final quarter of the License ending April 2015

iue by May 30, 2015),

yalty payments, 18 were not paid within the time provided for in the License,

of the License states that, Time is of the essence under this Agreement.

8.5(c) of the License, TPR agreed to pay an advertising fee of one percent

dates

quarter

failed



o f net

sales.

29.

Wi th o ne

30. TPR

has

fat

2015 .

31. Section 11.1

specified the}

32. Under

Section

by TPR's

French

33. TPR

never

34.

TPR

never

Sect ion

11.1

exception, TPR failed to pay the advertising fee on time.

ed and refused to pay the advertising fee for the period ending April 28,

of

the License Agreement required TPR to provide quarterly statements and

information

to

be i nc luded i n such statements.

11.1, such quarterly statements were to be signed and certified as accurate

financial officer, or by another officer or official

of

TPR approved by

Conihbction in advance in writing (an Authorized Officer ).

submitted aquarterly statement certified by

its

CFO or

an

Authorized

Officer,

submitted a quarterly statement with all

of

the information required under

ch ief

35.

Section

11

a tt ached a t

each

calendii

of

the License required

TPR

complete the Monthly Reports Form as

Schedule F and deliver the same to Licensor within ten

(10) days

ofthe

end

of

month.

36.

TPR

never submitted a monthly report form in the form attached as Schedule F.

37. With respect to the monthly report forms TPR did submit, 55 out of 60 were not

submitted within the 10-day period required by the License. The report for May 2010

was submitted more than one year late.

38. Section 11.3 of

the License provides in part as follows:

At least once

Licensor 's

signed and

public accountant

reputable independ

the Quarterly

t h at s u ch s ta temen ts

o f

the

Licensor

during each Annual Period, not later than 90 days after the end of

fiscal

year, Licensee shall deliver

to

Licensor: (a)

a

statement,

certified by Licensee's then regularly engaged independent certified

(or,

if

Licensee

has

no such regular engagement, by a

ent certified public accountant), stating that it has examined

Statements submitted by Licensor during the prior fiscal year and

accurately reflect the information in the financial records



39.

TPR never submitted

th e statement refer red to

in Sec tion

11.3

40.

Section 7

Licensee

• <

p) of the License says that Prior to the opening of each selling season,

Licensor

shall

meet

a t L icensor' s

office in L on do n where

Licensee wil l

nd

present

41.

TPR

did not

less did it

Licensor

with

a

plan

of

distribution

consistent

with Section 7.2(a) hereof.

present distribution plans prior to the opening

of

each selling season, much

so at

French

Connection's London office.

o

42. Sect ion 8.6

marketing/plr^mot

Period

on or

Period.

cf the License says that Licensee shall prepare and submit to the Licensor a

ion plan (the Marketing/Promotion Plan ) for each successive Annual

before the commencement

of

the last Quarterly Period

of

the current Annual

43. TPR did

first.

n o t

44.

The

License

indirectly thifou

License

as

Kingdom

arid

45. During the

widely avai

on

the IntenkH

submit a Marketing/Promotion Plan in each year

of

the License after the

provides that Licensed Products shall be distributed by

TPR

(directly or

gh its distributors) only in the Territory, defined in Section 1.21 of the

in respect

of

the 'FCUK' Licensed Mark, the world excluding the United

Republic of Ireland.

tferm

of

the License, and currently, FCUK Licensed Products are presently

able throughout the United

Kingdom

both at br ick and mor tar retailers and

46.

In

or

abou t

retailers a t

Kingdom, i

The Perfumlci

November 2014,

FCUK

Licensed Products were purchased from different

locations in London, Manchester, Newcastle and Birmingham, United

including Argos (a national low-end home and general merchandise retailer),

Shop

(a nat ional discount perfume retailer) , Savers (a national discount



chain

sellini

department

47. TPR is

Kingdom

48. Upon

th e

License

49. Section 2.5(

to

Licensee

restriction

Ireland

50. Upon i

European

L

License

g household goods and health and grooming products), TJ Hughes (a discount

store) and Wilkinson (a regional low-end hardware and home goods store),

awate of the availability of Licensed Products for sale throughout the United

information and belief, TPR and/or its distributors is, and throughout the term of

Has

been, actively selling Licensed Products in the United Kingdom.

c) of the License states that any 'FCUK Licensed Products' sold by Licensee

distributors outside the European Union will be sold subject to a contractual

prohibiting

the

importation

into the United Kingdom and the Republic

of

(emphasis added).

information and belief,

TPR sold

Licensed

Products

to

dis tr ibutors outside the

iiion without the contractual restriction required by Section 2.5(c)

of

the

51. Section 7.2(a) of the License set forth certain criteria for the retail stores into which the

Licensed Product s cou ld

be

sold.

52. Upon

Products

i

53. Section 7.2

contractual

Licensed

54.

Upon

info:

contractual

55. Section

11

Licensee,

infonbation and belief, TPR sold, and permitted its distributors to sell, Licensed

stores that did not meet the requirements

of

Section 7.2(a)

of

the License,

(a) of the License includes the following provision: Licensee shall impose

restrictions on its distributor(s) preventing them from distributing the

Products to any retail store or outlet that does not meet the Criteria.

a tion and belief, TPR sold Licensed Products to distributors without the

bstriction required by Section 2.5(c)

of

the License,

(a) of the license provides:

it

its sole cost and expense, shall prepare and maintain, in

in to

•n i l

•<



accordance

complete

a llow accountan ts

l imita t ion

books o f

Agreement,

under

this All

withgenerally acceptedaccountingprinciples consistently applied,

accurate books and records, in such manner and detail as will

to perform an audit (specifically including, without

originals or copies

of

documents and supporting entries in the

t) covering all transactions arising out

of

or relating to this

^nd to monitor compliance

by

Licensee

with all

of

its

obligations

r e em en t .

arid

the

a c coun

It also granted

records to

c<bhfirm

56.

In

the first

pursuant

to

TPR failed

conduct

a

57. TPR reg

contractual

58. French

under t he

French Connection the right to have an independent auditor review TPR's

compliance with the License.

duarter of 2014, French Connect ion retained KPMG to conduct an audit

section 11.4(a) of the License. In breach of its obligations under the License,

and refused to provide KPMG with the records necessary for KPMG to

fiill

and

complete

audit.

ulajrjly made commitments to

French

Connection that it would

perform

its

Obligations

by certain dates and then didnot abide by those commitments.

Correction was repeatedly required to chaseafterTPRto submitreports required

License and to pay its obligations under the License.

COUNT

I—DECLARATORY

JUDGMENT

59. French

Comection

re-alleges each

of

the foregoing paragraphs as though fully set forth

herein.

60. Section

5.1 of the License defines the Term

of

the agreement as a five-year period

on April 28, 2010, and terminating on the fifth anniversary thereof,

provides,

in

relevant part, that

the License shall be renewed for

a

further

period

of fiv|c| (5)

years

at

the

expiration of the

Term subject

to the following conditions:

commencing

61.

Section

5.2

5.2.2 The Licensee has not committed any material breach or persistent

breaches

of

this Agreement

at

any time during

the

Term;

5.2.3 The Licensee has performed its obligations under this Agreement to the



reasonable

62. By letter

63.

By

letter

described

because

Connect ion

satisfaction o f the Licensor ,

dawd January 20, 2015, TPR sought to renew the License.

dotted January 22, 2015, French Connection rejected the renewal because, as

ab

4)ve, TPR had committedmaterial and persistentbreaches of the License and

did not perform under the License to the reasonable satisfaction of French

PR

64.

The conduc ;

described above constitutes material and persistent breaches of the License

by TPR.

65. Because

of tijie

performance

66 .

Because of ih e

conduct

described above, French Connection

was not satisfied

with TPR's

of

its obligations

under

the License,

conduct described above,

TPR

did not have the right to renew the License

for

a further live-year

term.

67. On March 1'3, 2015,

French

Connection's counsel wrote to TPR and stated, inter alia:

It is FC s

i tself

as

harm

to

FC

relief

will

terminates

know that,

of the Licensb

understanding that, as

of

April

29,

2015,

TPR intends to conduct

License has been renewed. Such conduct will cause irreparable

and FC plans to go to court to enjoin such conduct. Injunctive

, however, be necessary

if

TPR acknowledges that the License

April 28, 2015. Such acknowledgement will allow the parties to

of April 29, they are operating under the provisions of Section 13

i f trie

n o t

on

s

Please

let us

TPR

in tends

been

terminated

that TPR do

will h av e n o

68. As stated in

rights if

TPIJ.

69.

TPR

know by the close of business on Monday, March 23 whether

to

conduct

itself on and after April 29 as

if

the License has not

. If we do not hear from you by then, we will have to assume

s not accept that the License will terminate on April 28, 2015 and

cho ic e bu t

to s ee k

court intervention.

the letter, French Connection was prepared to go into court to protect its

did not agree that the License would terminate effective April 28, 2015.

responiflpd in a letter fromits lawyersdated March24, 2015. While reserving TPR's

rights

to seek)

damages,

importantly,

TPR's lawyers stated:

Beginning en April 29, 2015 TPR intends to conduct i tself as

if

the License



has been tejrfminated

License),

injunctive ri

(expressly reserving its rights pursuant to § 13 of the

Accordingly, there will be no conceivable reason for FC to seek

ief.

Based on th s clear statement from TPR, French Connection did not seek injunctive relief

in April 201

70 .

Consis tent

with

wrote to TPR

TPR

that, goto

by the termination

71.

Rather, upoji

as i f th e LSbense

corresponded

the process

the right to

72. The License

o f

the expiration

of

the License, on April 29, 2015, French Connection

, reminded TPR that the License had expired on April 28, and reminded

g forward, the parties' respective rights and obligations would be governed

ion provisions in Section 13of the License. TPR did not object,

information and belief, for about five months, TPR indeed conducted

itself

had been terminated. For example, TPR and French Connection

with regard to

TPR's

schedule

of

Inventory in its possession, control or in

manufacture, because Section 13 of the License gave French Connection

ase such Inventory,

provided that TPR could sell Inventory not purchased by French Connection

3.4 made clear that such sales shall be made only with the prior approval

of

]

five months

of

acting consistently with the License having been terminated,

18, 2015,

TPR

wrote to French Connection and stated, We never agreed

is terminated. (In fact we believe our option is valid, has been exercised

to hold the rights for the next 5 years),

2, 2015, French Connection

learned that

TPR had so ld 402 ,000 wort h

of

goods without ever seeking,

much

less obtaining, French

c o n s e n t .

purch

bu t Section

[French Coiiiiection

73.

Af te r a lmos ;

on September

that t he lic e is e

and we contihue

74. On Octobe r

French Co

Tnection

Connect ion '

3

75.

On

or

about

October

2,

2015, TPR informed one of

it s

customers

that

it

would

soon

have

10



available for

76.

By

reason

Connect ion

pursuant to

sale additional products with the Licensed Marks.

bf the foregoing, a

real and

actual controversy exists

between

French

and TPR, and French Connection is entitled to a declaratory judgment,

28U.S.C. § 2201, that the License expired on April 28, 2015.

OUNT II— RE CH O F O NT R T ROY LTIES

ND

DVERTISING

77. French Connection re-alleges each

of

the foregoing paragraphs

as

though fully set

forth

herein.

is a binding and enforceable contract between TPR and French Connection.

ion has performed all of the conditions, covenants, and promises required

r fo rmed i n accordance w it h t he

terms

and condi tions

o f the License .

78. The License

79. FrenchConnection

by it to be p =

80. TPR breachdd the License by failing to make all royalty payments required under Section

9 o f

t h e L i cen se .

81. TPR breached

Section 8.5(

82 . Section 8.5

on

advertisi^]

following

TPR

was

required

the

License

the License by failing to make all advertising payments required under

) of the License.

^fthe

License

required TPR to spend, each

year,

specified minimum amounts

g, sales and promotion. Shortfalls in any given year were to be spent in the

as

an

additional

amount.

If

there

was a shortfall at the end of the License,

to pay that amount to French Connection within 30 days of the end of

yea r

83. At

the end

sales and

by failing to

84. French Connection

:}f the

License, there

was a shortfall in the minimum spend on advertising,

promotion in an amount in excess of 964,000. TPRhas breached the

License

pay this amount.

has been damaged by TPR's failure to pay its obligations under the

11



License.

85. French

herein.

COUNT

I I I—BREACH O F CONTRACT

Connection re-alleges each of the foregoing paragraphs as though

fully

set forth

86. Under the License, TPR was obligated to pay 5.5 percent of net sales in royalty and

advertising payments

87. Upon

information

December

31 ,

201

damaging French Connection

88. Under Sect ibn

Produc ts f rom TPR

89. During the

90. Upon

provided for in the

Connection such higher prices

93. A purpose

conf irmat ion from

o f

and belief, the amount that TPR reported as due for the period through

was less than what was owed under the terms

of

the License, thereby

3.1

of

the License, French Connection had the right to purchase Licensed

kt

a price to be determined as set forth in the License.

License term, French Connection purchased Licensed Product from TPR.

infonriation and belief, TPR charged French Connection

a

price higher than that

License. French Connection has been damaged by TPR's charging French

COUNT

I V—BREACH OF

CONTRACT

REPORTS

91. French Comection re-alleges each of the foregoing paragraphs as though fully set forth

herein.

92.TPR breacr̂ d the License by failing to deliver Quarterly Statements and annual

s t a t emen t s .

these reports was to permit French Connection to obtain independent

PR's outside accountants that the amounts TPR was paying in royalties were

12



t he co rr ec t amount s

owed

under

the

License.

94.Because TPR. did not submit such reports, FrenchConnection lost the benefit of this part

of its bargain andd^esnotknow whether TPRhas underpaid under the License.

95. French

herein.

COUNT V—PAYMENT OF INTEREST

Connection re-alleges each of the foregoing paragraphs as though

fully

set forth

96. Under Sectipn 9.5 of the License, TPR agreed that any royalty payments which are due

thb date due he re und er shall

accrue interes t

at a

rate of one

and

one-half

nd not paid on

percent (1

1/2%) mbjnthly

97 .

As a resul t

o f

is due at the agreed

on the unpaid balance.

TPR's failure to make timely royalty payments under the License, interest

ikpon

rate from the date each payment was due.

COUNT V I—BREACH OF CONTRACT AUDIT

98. French Comection re-alleges each of the foregoing paragraphs as though fully set forth

herein.

99. Section

11

independent auditoi

of the License provided French Connection with the right to have an

inspect and audit TPR's record. In addition, Section 11.4(b) states:

If, as a

result

otherwise, it

payments tc

been paid

correct and

Section 9.5)

the examina t ion

reimburse

Licensor

incurred

in

deficiency

of any inspection and/or audit of Licensee's books and records or

is determined at any time

and

from time to time that Licensee's

L i cen so r h e reunde r

were less than the amou nt w h ic h

s ho ul d h av e

respect to the audit period, Licensee shall make all payments to

eliminate any such underpayments (including interest payable under

within ten (10) days after receipt of notice by Licensor. In addition,

if

reveal s an underpayment of 5% or more then Licensee shall

for all cost s

and

expenses

of

Licensor and its representatives

connection with any inspection and/or audit pursuant to

which

the

discovered by Licensor.

with

w s

13



100.

KPMG's findings

contractually oblig

101.

TPRI

result.

102.

forth

herein.

103.

In Jtine 2015, French Connection retained KPMG to conduct such an audit,

ejxceed

the 5% threshold

defined

in

the License. Accordingly, TPR

is

aied

to

bear

thecost of

these procedures,

has failed to pay these costs and French Connection has been damaged as a

The

COUNT

V I I—BREACH

O F

CONTRACT -

SECTION 13

Frenlcjh

Connection re-alleges eachof the foregoing paragraphs as though

fully

set

License is a valid, binding and enforceable contract between French

Connec tion and TPX.

104.

105.

106.

Sect:

on 13

of

the License sets forth the rights and obligations

of

the parties upon

termination

of

the License,which occurred on April 28, 2015.

Frenqh Connection has performed all

of

its obligations under the License.

has breached the License by failing or refusing to perform its obligations

ite TPR's abili ty to fully perform under the License,

failure and refusal to perform its obligations under Section 13 of the

<bf

the terms

of

the License and deprives French Connection

of

the benefit

of

: n the

License.

TPR

under

Section 13,

107.

TPRf

License is a

breach

dospi

the

t e rms con ta ined

108.

t he L i cen se .

109.

French Connection has no adequate remedy at law with regard to Section 13 of

Frenph Connection requests that this Court enter an order requiring TPR to

its obligations under Section 13 of the License.

pecifically perform

14



112.

The

113. The

Office, Registration

114.

The

COUNT V II I— L ANHAM AC T V IOLAT IONS

110. French Connection re-alleges each of the foregoing paragraphs as though fully set

fo rth here in.

111. In claiming

that

the

License

has been renewed and continuing to

manufacture

and

sell Licensed Products,

TPR has

admit ted tha t it plans to use French Connection's Licensed

Marks wi thout Frenlcth Connection's consent.

icensed Marks are both valid and legally protectable.

CUK

mark is registered with the United States Patent and Trademark

No.

3028227.

French Connection mark is registered with the United States Patent and

]Registration

No.

3293682.

Frenldh

Connect ion owns the FCUK and French Connec ti on marks.

Trademark Office, $

115.

116.

TPR

s use of the Licensed Marks to identify goods without French Connection's

l ikel ihood

o f

confusion.

onsent

will

cause i.

117.

118.

products.

119.

TPR

The

TPRf^ sales and advertisement of products bearing the Licensed Marks after

License are directly competing with French Connection's products bearing the

xpiration of the

same marks.

120.

121.

TPRl

A s

is presently using the Licensed Marks in commerce, in the sale and

advertisement of French Connection's products.

broducts

TPR

sells

and

adver ti ses a re ident ical to French Connection's

is infringing the Licensed Marks, as the License expired on April 28, 2015.

result of TPR's persistent and material breaches of the License, French

15



Connect ion is likelv

122. TPRJ'k

wrongful

use

of

the Licensed Marks comprises

an infringement

of

the

Marks and is likely to cause confusion, mistake and deception to the public

origin of the goods, causing irreparable harm to French Connection for

aclbquate remedy at law.

reason of the foregoing acts, TPR is l iable to French Connection for trademark

15U.S.C. § 1114.

's use of the Licensed Marks to promote, market or sell products in

rench Connection constitutes unfair competition pursuant to 15 U.S.C.

ubfair competition is causing irreparable harm to French Connection for which

remedy at law.

PRA YE R FOR

REL IEF

F r ench Connec ti on

to succeed on t he meri ts o f its claims for

breach

o f

contract.

as to the identity

wh i ch t he re is

no

and

123. By

infringement under

124.

TPRf

competition with

§ 1125(a). TPR's

there is no adequati

WHEREFORE, Plaintiff French Connection seeks relief and

demands

judgment against

follows:efendant

TPR

as

1.

2

3. On Cbunt III, damages in an amount to be determined at trial.

4. On Count IV, an Order requiring TPR to deliver to French Connection,

a. for each Quarterly Period under the License, the quarterly statement required

under

Section

11.1 of

the License; and

b. for

ejich

Annual

Period under the License, in accordance with Section 11.3 of the

License, a statement, signed and certified by TPR's regularly engaged

On

Count I, a Declaration that the License expired as ofApril 28, 2015.

Count II, damages in an amount to be determined at trial but currently

estimated

to

be in exces s of

1.5 mi ll ion.

On

16



independent certified public accountant (or, if TPR has no such regular

agement, by a reputable independent certified public accountant), stating that

examined the Quarterly Statements submitted by TPR during the prior fiscal

knd

that such statements accurately reflect the information in the financial

records of

TPR.

eng

i t

yea r

has

On

Count V, in an amount to be determined at trial equal to 1.5 percent interest

ate payment.

er month for each

7

On Count VI, damages in an amount to be determined at trial.

On

Cbunts VII and VIII, an injunction and order

of

specific performance against

TPR,

as

follows

(wi|t|h

defined terms to be

as

they

are

defined

in

the License):

Enjoining TPR its affiliates, agents, servants, employees, directors,

officers, attorneys, and all other persons in active concert or participation

with TPR from manufacturing or assembling, distributing, selling,

transferring, delivering, advertising, promotion and sourcing of Licensed

Products or componentry bearing a Licensed Mark. Notwithstanding the

foregoing, and subject to the other provisions

of

the Court's Order, current

work-in-process for which raw materials have been received and which

are the subject

of

existing confirmed orders, may be completed and sold

of f in accordance with the terms of the License, but TPR may not place

any new orders with its vendors for Licensed Products.

Enjoining

TPR

its affiliates, agents, servants, employees, directors,

officers, attorneys, and all other persons in active concert or participation

with TPR from transferring, selling, delivering or otherwise disposing any

items in the Inventory list TPR provided to French Connection on July 22,

2015, as well as any other materials, goods, products or other items

bearing either the French Connection or FCUK marks, without first

obtaining from French Connection (in writing) consent to sell or dispose

of such items, goods or products.

All of the rights of TPR to use the Licensed Properties shall terminate

forthwith and shall revert immediately to French Connection and

TPR

no

longer shal l have the right to use the Licensed Properties, or any variation

or simulation

thereof,

and

shall d iscont inue al l

use of

the L icen sed

Properties, and promptly shall transfer to French Connection, at no cost to

French Connection, all registrations, filings and rights (not including

17



inventory) with regard to the applicable Licensed Properties which it may

have possessed at any time including, without limitation, French

Connection Beauty Corp.

French Connection shall have the option to cause

TPR

to immediately

transfer and assign to French Connection, all

of

the rights

of

TPR

to any

and all Fragrances and Packaging Designs developed by or on

behalf of

TPR for the Licensed Products for consideration equal to the unamortized

cost basis to TPR, measured on a

ten

(10)

year

amortization schedule, for

such Fragrances or Packaging Designs. TPR also agrees to use its best

efforts to obtain the consent of any third party required in connection with

any such assignment and to cooperate with French Connection and take

such

other

actions as

may

be reasonably necessary to carry out the terms

of Section 13.5(b) of the License.

All labels, tags, and packaging materials containing Licensed Property that

are not required to complete the aforesaid current work-in-process shall

be, at French Connection's option in its sole discretion, within 10 business

days of the exercise of such option, sent or shipped to French Connection

(at no cost to French Connection) or destroyed, with TPR providing proof

o f such

destruction

t o F re nc h Conne ct io n i n t he

form

o f a sworn

statement

or

certificate.

ft TPR shall deliver to French Connection, within 10 business days, at no

cost to French Connect ion, all i tems such as designs , sketches, patterns,

photographs, advertisements, brochures, forms, and other materials

( Materials ) in its possession relating to or bearing on the Licensed

Products, except such materials acquired by

TPR

for use in Licensed

Products as may be owned by

TPR

as specified in Section 10.1(a) of the

License. From and after the

date

of

t hi s Order , TPR

shall no t

use

or

permit others to use any such items or other Materials, or any variations

thereof.

Unless such dates have already passed, on the last day of each month

during the period defined in Section 13.4 of the License, TPR shall

immediately deliver to French Connection a complete and accurate written

schedule

of

TPR's inventory

of

finished Licensed Products, related work-

in-process then on hand (including uncut piece goods and products and

materials in the process of manufacture), confirmed orders, and all

Packaging Materials, advertising and promotional materials and Business

Materials

or o t he r documen ts or

i tems

that b ear the

Licensed

Marks or

French Connection's name, in TPR's possession or control or in the

process of manufacture for Licensee (collectively, Inventory ). French

Connection thereupon shall have the option ( Inventory Option ),

exercisable by notice in writing delivered to TPR within twenty (20) days

after French Connection's receipt of the complete Inventory schedule, to

18



purchase (directly or through its Affiliates) all or any portion of the

Inventory at a purchase price equal to the lesser of TPR's direct cost as

carr ied

on

it s books o f account

or

the fair marke t value.

With respect to those items on which French Connection has exercised the

Inventory Option in accordance

with

its Notice dated September 14, 2015,

TPR shall (i) deliver forthwith to French Connection or its designee the

Inventory items in its possession, (ii) provide within five (5) business days

the dates on which it plans to deliver the Inventory items not yet in its

possession, such dates to be within sixty (60) days of this Order, and

(iii) with respect to the Inventory that is not yet in TPR's possession,

deliver same to French Connection or its designee on the dates provided in

(ii) above. French Connection shall pay

TPR, at the prices set forth in the

July 22, 2015 spreadsheet listing the Inventory, for the Inventory items it

chooses to purchase within forty-five (45) calendar days following its

receipt thereof, provided that French Connection shall be entitled to

deduct as offset from such purchase price any amounts owed to French

Connection by

TPR

(and/or to direct payment for any part

of

such

Inventory to any supplier of Licensed Products in order to reduce an

outstanding balance due to such supplier from TPR).

If

French Connect ion does not exercise the Inventory Option to purchase

all the Inventory, TPR shall be entitled, for a period of t ime (as agreed to

by the Parties but in no event extending beyond October 28, 2015) (the

Sell-Off Period ), but in no event beyond the Sell-Off Period, to sell and

dispose

of

such

of

the Inventory as French Connection did not elect to

purchase pursuant to the Inventory Option, on a non-exclusive basis. Such

sales shall be made only with the prior approval of French Connection and

conducted in accordance with all of the provisions of the License and this

injunction, including an accounting therefor and the payment of

Percentage Royalties thereon. Such accounting and payment shall be due

within ten (10) calendar days following the end of each month in the Sell-

Off Period. Any items in the Inventory not sold and remaining after the

Sell-Off Period shall be delivered, disposed of or destroyed, in accordance

with French Connection's instructions, without charge to French

Connect ion or

i t s Aff i lia tes.

No later than the end of the Sell-Off Period (as defined in Section 13.4 of

the License), TPR shall promptly cause any entity formed under

Section 10.2(d) , including, without limitation, French Connection Beauty

Corp., to cease all operations and cease using the French Connection

and/or FCUK names .

Subject to the other provisions

of

the Court's Order, TPR shall not deliver

products to any distributor unless it has first provided to French

Connection a copy

of

the contract with said distributor that includes the

19



8.

9.

Dated:

New

York,

October 9

specific contract restrictions required in Sections 2.5(c) and 7.2(a) of the

License .

Pre-judgment interestas permittedby law.

Suclt other and further reliefas the Court shall deemjust and proper.

New York

2015

Respectfully submitted,

BAKER & McKENZ fE L LP

David Xasloi

452

Fifth Avenue

New

York, NY 10018

Attorneys for Plaintiff

F r ench Connec ti on L im it ed

french connection ltd v. tpr holdings - fcuk.pdf

Documents