Alexa Tondi Professor Trachtenberg FM324 Section 75A 17 November 2011 Case Study Assignment: Calvin Klein vs. Warnaco Group Inc. On May 30, 2000 The Calvin Klein family filed a lawsuit against Warnaco Group Inc for eighteen counts of trademark infringement, trademark dilution and intentional misrepresentation. Nearly a month later Warnaco answered with a counter suit, denying the major allegations and justifying the dilution to falling within the scope of the two parities licensing agreement.
The case study brings forth information regarding fashion retailing, distribution practices and even the licensing practices expected within the marketplace, however as a reader one should keep in mind that during the millennium “licensing was a staple in the fashion business. ” (pg. 8) Many companies looked to licensing to help brand extension and most, in fact, built a steady revenue from licensing out their brands. These brands include brands like Ralph Lauren, Nine West and Liz Clairborne, but also venture into the luxury market targeting brands such as Gucci and Fendi as well.
It is safe to say that licensing, in the millennium, was a prominent and successful trend within the fashion industry. It was this trending success that emerged licensing groups, such as the Warnaco Group. Warnaco’s history, stated within the case study on pages 15-18, is an impressive one, but it also the first time one has the ability to see what growth Warnaco brought to the Calvin Klein family. “Wachner’s most notable business success involved the cK Calvin Klein underwear line… Wachner grew sales from 55 million dollars to about 350 million dollars” in a only five years.
Gabriella Forte, the president of CKI even credited Wachner with building the line in its entirety. On page 16, Forte elaborates on how Wachner accomplished such a task stating “by expanding markets, increasing the flow of products in stores and making sure the infrastructure dealt with the expansion of the business. ” This is a direct representation of what was expected of the Waranco Group from those executives within Calvin Klein Inc. This mutual understanding is what was portrayed within an agreement between the two parties and what worked toward success over the next forty years.
This case study touches on many topics within licensing but the three most dominant aspects within the Warnaco Group vs. Calvin Klein suit are the agreements and understandings discussed with a contract, the rights to a trademark and the rights of both the licensor and the licensee. While briefing this case study one can not help but notice, stated on page 21, the agreements that are displayed in exhibit 1: Excerpts from Calvin Klein Jeanswear Licensing Agreement. Here it is clear that the agreement, signed by BOTH parties, states that Warnaco agrees to maximize the quantity of Articles sold, and will be consistent with CKI’s past practices.
One can assume, that due to the prolonged history between the two parties this includes Costco, Sam’s Club and BJs store, which alone were held responsible for 150 million dollars in warehouse sales, just one year prior to the filing of the lawsuit. It is also important to point out that this licensing agreement is not with CKI as the owner, it is in fact a licensing agreement with the CK Trademark Trust being the beneficial owner to ALL rights, titles and interest in or to the Licensed Mark.
The licensing agreement then continues to state that “Warnaco controls any such act or thing which may cause any affect to the Trust. ” With the understanding of licensing, as a whole, it is learned that a risk of licensors, overall, is the loss of control over their property. Although both parties presented a good fight, it is important to understand that this licensing agreement is not an agreement based on emotion, it is based on business. This agreement is strategized by contact, understanding and product.
Calvin Klein fights this battle based on emotion, whereas, as evidence has stated Waranco has fought in sight of facts. The eroding of the Calvin Klein image has nothing to do with the products and selling strategies conducted by Waranco. In fact, it is evident that when times were good and sales were high, both parties credited these strategies to success. Either way, it is important as a reader to remember, that even if proven non successful these strategies were agreed upon, legally, in a form of a contract. I, as a reader, find the defendant Waranco Group Inc, NOT GUILTY.