191 F.3d 457 (7th Cir. 1999), 98-3127, World Championship Wrestling, Inc. v. GJS Intern., Inc.

Docket Nº:98-3127.
Citation:191 F.3d 457
Party Name:WORLD CHAMPIONSHIP WRESTLING, INC., Plaintiff-Appellee, v. GJS INTERNATIONAL, INC., doing business as Today's Trendz, Defendant-Appellant.
Case Date:August 04, 1999
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 457

191 F.3d 457 (7th Cir. 1999)

WORLD CHAMPIONSHIP WRESTLING, INC., Plaintiff-Appellee,

v.

GJS INTERNATIONAL, INC., doing business as Today's Trendz, Defendant-Appellant.

No. 98-3127.

United States Court of Appeals, Seventh Circuit

August 4, 1999

Editorial Note:

This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA7 Rule 53 regarding use of unpublished opinions)

Argued Jan. 24, 1999.

Appeal from the United States District Court for the Northern District of Illinois, Eastern, Division. No. 98 C 3025. Morton Denlow, Magistrate Judge.

Before Hon. THOMAS E. FAIRCHILD, Hon. DANIEL A. MANION, Hon. MICHAEL S. KANNE, Circuit Judges.

ORDER

World Championship Wrestling, Inc. (WCW) sued GJS International, Inc., d/b/a Today's Trendz (Today's Trendz) seeking injunctive relief and damages on various trademark and service mark claims as well as state-law claims. The district court had jurisdiction based on the federal claims, and diversity of citizenship. The applicable state law is that of Illinois. After trial to the bench (before a magistrate judge by consent), the court enjoined Today's Trendz from manufacturing, distributing and selling WCW merchandise, but reserved the question of damages for further trial. We have jurisdiction of the appeal from the order granting the injunction. See 28 U.S.C. § 1292(a)(1).

WCW organizes and promotes professional wrestling events worldwide. It produces related merchandise, including T-shirts, hats, and posters, to sells at the arenas. It also licenses others to manufacture and sell in the retail market products bearing WCW logos and marks. Today's Trendz manufactures and distributes novelty merchandise including posters, T-shirts, headwear, and other apparel.

Today's Trendz, by its president, Stevens, applied for a WCW license and on September 29, 1997, signed a Licensing Deal Memo, referred to by the parties as the September Deal Memo. It specified trademark categories, licensed articles, territory, royalty, advance, guarantee, initial term "Through DEC 31 1999," certain deadlines, number of samples, sales projections, distribution channels, liability insurance required, and other terms, which we will later discuss. Stevens sent his check for $10,000, the amount due upon signing. Unknown to Stevens, WCW never signed the September Deal Memo, but agents of WCW represented that it would be. WCW requested that Stevens provide a $75,000 letter of credit and Stevens did so. WCW's executive vice president, Nick Lambros, wished to change the procedure so that officers of WCW would approve a Deal Memo before it was presented to a prospective licensee. He had a new deal memo prepared, dated December 1, and initialed approval. Mr. Stevens was never made aware of the December Memo, and proceeded as if the September Deal Memo were in force. The court found that the September Deal Memo is an enforceable contract under which the parties operated while they negotiated a comprehensive licensing agreement. On appeal the parties do not indicate disagreement with this treatment.

The September Deal Memo provided that:

If Licensor signs the Deal Memo, Licensee and Licensor shall enter into a long-form License Agreement containing the terms and conditions set forth in this Deal Memo as well as such other terms and conditions customarily found in merchandise license agreements.

WCW sent Today's Trendz a proposed Merchandising License Agreement on December 16, 1997. That was one reason Stevens believed the September Deal Memo had been signed. Stevens consulted an attorney and sent WCW thirty-one comments and proposed changes. On January 16, WCW sent a second draft, but Stevens replied that there were five major problems. There were further discussions between the parties and WCW prepared a third draft but never sent it. The parties never signed a long-form License Agreement. The court found that no oral agreement was reached as to its terms and that between February 25 and March 3, WCW made the decision that it no longer desired to do business with Today's Trendz. On March 3, 1998, WCW sent a letter to Today's Trendz terminating the December Deal Memo (then believed by WCW to be the deal memo in force) "since the parties have been unable to come to terms agreeable to WCW for a long form License Agreement." Today's Trendz refused demands that it discontinue production, sale, or distribution of WCW merchandise. On May 14, WCW refunded Today's Trendz' $10,000 original advance. On May 15 WCW refunded checks which Today's Trendz had tendered as further payments, and instituted this action.

The September Deal Memo also provided that:

License acknowledges and agrees that by signing this Deal Memo, Licensee is making an irrevocable offer to Licensor to license from Licensor rights to the Property on the terms and conditions set forth in the Deal Memo. If Licensor elects not to countersign this Deal Memo within ninety (90) days of Licensee's signature or elects not to sign the long-form License Agreement, Licensor shall refund to Licensee any amounts paid by Licensee under this Deal Memo and neither party shall have any liability to the other.

Understandably, WCW contends that the sentence last quoted gave it the right unilaterally to revoke the Deal Memo if it did so before signing the long-form License Agreement. It claims that any rights which were conferred on Today's Trendz by the Deal Memo could no longer be exercised after an election by WCW not to sign a long-form License Agreement.

The September Deal Memo in one provision imposes on both parties a duty to enter into a long-form License Agreement; in another it permits one...

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