Calvin Klein Trademark Trust v. Wachner

The Calvin Klein Trademark Trust (CK Trust) (plaintiff) became the registered owner of the trademarks “CALVIN KLEIN,” “CK/CALVIN KLEIN,” “CK/CALVIN KLEIN JEANS,” and “CK,” used for the most well-known designer brands in the fashion industry, and it became the owner of all of the goodwill related to the trademarks. At the same time, Calvin Klein, Inc. (CKI) (plaintiff), Linda Wachner (defendant), and various companies (Warnaco) (defendants) became the beneficial owners of the CK Trust. Warnaco received a license to manufacture and distribute jeans and men’s accessories bearing the CK Trust’s trademarks. Warnaco also received a license to operate Calvin Klein outlet stores selling these trademarked products. The licenses allowed for the operation of a full-price, wholesale business, but Wachner and Warnaco began to discount and mass-market the trademarked products at warehouse-membership clubs. Wachner and Warnaco sold large volumes of low-quality goods to unauthorized distributors and engaged in self-dealing by selling other brands under Warnaco’s control through the Calvin Klein outlet stores. The CK Trust and CKI brought an action against Wachner and Warnaco, claiming trademark infringement and trademark dilution in violation of the Lanham Act. The CK Trust and CKI argued that Wachner and Warnaco used the trademarks to deceive the public as to the approval of the trademark owner and diluted the trademarks’ values by doing long-term damage to the public’s goodwill toward the quality designer brand.