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Levy Group, Inc. v. L.C. Licensing, Inc.

2010 NY Slip Op 33800, 2010 N.Y. Misc. LEXIS 6816 (2010)

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Levy Group, Inc. v. L.C. Licensing, Inc.

New York Supreme Court

2010 NY Slip Op 33800, 2010 N.Y. Misc. LEXIS 6816 (2010)

Facts

The terms of a license agreement granted a licensee, Levy Group, Inc. (Levy) (plaintiff) the exclusive right to sell and distribute outerwear bearing the world-famous trademarks “Liz Claiborne” and “Claiborne.” The licensors of the trademarks, L.C. Licensing, Inc. (LCL) and Liz Claiborne, Inc. (Claiborne) (defendants) retained the right to use the trademarks and license them to any person for products other than outerwear. Over many years, Levy developed a network of better-zone retail stores associated with higher quality and prices to purchase large volumes of the trademarked outerwear. LCL and Claiborne required Levy to use the less prestigious “Crazy Horse” trademark owned by Claiborne to sell merchandise to J.C. Penney Corporation (JCP) because JCP was not a better-zone retailer. Claiborne subsequently entered into an agreement to grant JCP the exclusive world-wide license to use the “Liz Claiborne” and “Claiborne” trademarks for products other than outerwear. Levy brought an action against LCL and Claiborne, claiming a breach of the license agreement and a breach of the covenant of good faith and fair dealing. Levy argued that because the prestigious marks would appear on items sold at JCP, the better-zone retailers would no longer purchase Levy’s outerwear and the profit margin on sales to JCP would be lower. LCL and Claiborne claimed that there was no violation of the terms of the license agreement and moved to dismiss the entire complaint.

Rule of Law

Issue

Holding and Reasoning (Kapnick, J.)

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