Oleg Cassini, Inc. v. Couture Coordinates, Inc.

• Decision Date: 06 March 1969
• Docket Number: No. 69 Civ. 26.,69 Civ. 26.
• Citation: 297 F. Supp. 821
• Parties: OLEG CASSINI, INC., Plaintiff, v. COUTURE COORDINATES, INC., Isadore Dion and Charles Coen, Defendants.
• Court: U.S. District Court — Southern District of New York

297 F. Supp. 821

OLEG CASSINI, INC., Plaintiff, v. COUTURE COORDINATES, INC., Isadore Dion and Charles Coen, Defendants.

No. 69 Civ. 26.

United States District Court S. D. New York.

March 6, 1969.

COPYRIGHT MATERIAL OMITTED

Booth, Lipton & Lipton, New York City, for plaintiff; Donald S. Engel, New York City, of counsel.

Strasser, Spiegelberg, Fried & Frank, New York City, and Wolf, Block, Schorr & Solis-Cohen, Philadelphia, Pa., for defendants; Matthew Gluck, New York City, H. Robert Fiebach, Philadelphia, Pa., of counsel.

OPINION

HERLANDS, District Judge:

By this application for an injunction pendente lite, plaintiff, Oleg Cassini, Inc., seeks to enjoin defendant,¹ Couture Coordinates, Inc. (hereinafter "Couture" or defendant), and its officers, agents, employees, successors, assigns and all persons in concert with them from using the trademark OLEG CASSINI or any other name including the word OLEG or the word CASSINI or any other colorable imitation of plaintiff's registered trademark OLEG CASSINI, on clothing, accessories or any other products, or from otherwise infringing plaintiff's trademark.

The complaint, alleging trademark infringement, demands a permanent injunction, an accounting, treble damages and costs. Defendant has demanded a trial by jury.

For the reasons set forth below, the Court denies the application.

Statement of Facts

This opinion sets forth the findings of fact and conclusions of law which constitute the grounds of the Court's action. Fed.R.Civ.P. 52(a).

Plaintiff, a New York corporation, is engaged in the business of designing and authorizing the manufacture and distribution of men's and women's clothing, accessories and other items, under the trademark OLEG CASSINI. Mr. Oleg Cassini, a well-known designer of women's clothing, is sole shareholder in plaintiff corporation.

Plaintiff registered its trademark OLEG CASSINI in the United States Patent Office on August 27, 1958, registration No. 650952 and on January 21, 1958, registration No. 657489.

Defendant, Couture, is an independent manufacturer and designer of women's sportswear. It is a Pennsylvania corporation; its principal place of business is in Pennsylvania. Prior to June 1967, all of the issued and outstanding stock of Couture was owned by Charles Coen or by members of his family.

For some time prior to June 1967, Couture had been operating under a license from plaintiff for the manufacture of women's sportswear with the OLEG CASSINI trademark.

In June 1967, Couture was insolvent and indebted to plaintiff in an amount in excess of $70,000, representing royalty obligations under its license agreement with plaintiff.

In June 1967, Penn Garment Manufacturing Co., Inc. (hereinafter "Penn"), by purchases of Couture stock, became a dominant shareholder of Couture.²

Isadore Dion is the president of both Couture and Penn.

On June 1, 1967, plaintiff entered into a new license agreement with Couture wherein plaintiff granted to Couture the sole and exclusive license to use the trademark OLEG CASSINI and all registered trademarks and tradenames connected with the use of the name OLEG CASSINI, in connection with the manufacture, production and sale of certain women's sportswear, for a term of ten years. (The License Agreement is annexed as Exhibit C to Mr. Cassini's affidavit, sworn to December 30, 1968, and will hereinafter be cited as "License Agreement".)

Defendant claims that, at the end of 1967 or the early part of January 1968, Oleg Cassini requested defendant to relinquish its rights with respect to certain items which defendant had the exclusive license to produce under the License Agreement. Mr. Dion allegedly refused to relinquish these rights on behalf of Couture and now asserts that Mr. Cassini stated that "he would refuse to approve our line and would put us out of business." (Dion Opposing Affidavit, sworn to January 17, 1969, ¶ 3.)³

Sometime in January 1968⁴ Mr. Cassini and other representatives of plaintiff visited Couture's showroom in New York and notified Couture's employees that plaintiff disapproved thirty-nine styles that had been prepared by Couture. (Cassini Affidavit, sworn to December 30, 1968, ¶ 13; Cassini Affidavit, sworn to January 13, 1969, ¶ 5; Peggy Nestor Affidavit in Support of Motion, sworn to January 13, 1969, ¶ 4; Dion Affidavit, sworn to January 17, 1969, ¶ 3).

Subsequently, by letter dated January 19, 1968, plaintiff's attorneys notified defendant that the thirty-nine specified styles were unacceptable to plaintiff and could not be sold under the Cassini label. The letter also indicated that any modification of these styles would have to be approved by Mr. Cassini, in accordance with the terms of the License Agreement. (Dion Affidavit, sworn to January 17, 1969, Exh. C.)

Mr. Cassini contends that defendant never re-submitted the designs as required, and that, between January and June, 1968, he repeatedly pointed out to Mr. Dion violations of the Licensing Agreement, such as, failure to submit samples, poor merchandise quality and workmanship, and sales to discount stores. (Cassini Affidavit, sworn to January 13, 1969, ¶ 6.)

Mr. Dion alleges that he eventually agreed, on behalf of Couture, to relinquish some of its rights under the License Agreement; and, after so doing, Mr. Cassini and other representatives of plaintiff re-reviewed the disapproved line of clothing and approved the entire line, including the thirty-nine styles that were the subject of the letter of January 19, 1968. (Dion Affidavit, sworn to January 17, 1969, ¶ 3.) Defendant also asserts that at no time after January 19, 1968, orally or in writing, did plaintiff note disapproval of any of defendant's styles and at no time did Couture manufacture and sell any merchandise which had not been approved. (Dion Affidavit, sworn to January 17, 1969, ¶ 6.)

In a letter dated February 5, 1968, attorneys for plaintiff suggested that a meeting be held with defendant to discuss defendant's sale of Cassini merchandise to outlet stores in violation of the License Agreement. (Arnold I. Biegen Affidavit in Support of Motion, Exh. 4.) There is no indication that such a meeting ever took place.

Apparently for several months prior to May 16, 1968, negotiations took place between plaintiff and Penn regarding the possibility of an exclusive license arrangement for certain Cassini merchandise. (Dion Affidavit, sworn to January 9, 1969, Exh. B.) Mr. Cassini and Mr. Dion were the negotiating parties.

Defendant failed to pay the minimum royalty which was payable under the terms of the License Agreement on February 15, 1968, or within the following fifteen days. Apparently no objection was made to the delay in payment; and, on March 11, defendant paid the amount owed. Thereafter, defendant tendered no royalty payments until July 26, 1968.

Defendant claims that, in late March or April 1968, it informed Mr. Cassini that "Couture was tight for cash and that it would not be able to meet its royalty obligations for the next few months." Mr. Dion asserts that "Mr. Cassini stated that would be all right because he is not concerned and he is confident that plaintiff would eventually be paid." (Dion Affidavit, sworn to January 17, 1969, ¶ 5; Dion Affidavit, sworn to January 9, 1969, ¶ 6.)

On the other hand, Mr. Cassini denies that Mr. Dion ever informed him that Couture was "tight for cash"; and he asserts that quite to the contrary, Mr. Dion assured him that Couture was financially sound.⁵ (Cassini Affidavit, sworn to January 13, 1969, ¶ 9.)

On May 16, 1968, plaintiff and Penn entered into an exclusive license agreement for Penn to manufacture Cassini-designed junior dresses in a given wholesale price range. (Dion Affidavit, sworn to January 9, 1969, Exh. B.)

On July 1, 1968, plaintiff's attorneys wrote a letter to defendant advising it that the License Agreement was cancelled by reason of several defaults, including distribution to discount houses and close-out stores; inferior execution of garments; and derogation of the Cassini name by attempts to dissuade persons from purchasing the line then being manufactured by Penn. (Biegen Affidavit, Exh. 5.)⁶

Attorneys for Couture responded to this letter in a letter dated July 9, 1968, informing plaintiff that Couture was not in default under its contract and that the attempt to terminate was without effect.

On July 18, 1968, plaintiff's attorneys again wrote to defendant.⁷ In relevant part, that communication stated:

"Our client advised us that you have not made any payments upon your royalty obligation in the past five months and you are hereby advised that your default is noted.

Since your payments are more than fifteen days overdue the licensor, Oleg Cassini, Inc., hereby elects to terminate your license and all of your rights arising thereunder." Biegen Affidavit, Exh. 7.

In their letter dated July 23, 1968, defendant's attorneys indicated that they considered the attempted termination of the License Agreement ineffective and that they intended to cure the delinquency in royalty payments immediately.

On July 24, 1968, plaintiff's attorneys took the position that plaintiff, by its letter of July 18, 1968, had effectively elected to terminate the agreement and requested a schedule of defendant's inventory of Cassini merchandise.

On July 26, 1968, Couture sent a check to plaintiff for all royalties due. That check contained the following indorsement:

"This check covers all monthly minimum royalties to date under Agreement between Oleg Cassini, Inc. and Couture Coordinates, Inc., dated June 1, 1967, and acceptance by the payee shall constitute an acknowledgment that no default exists under the agreement." Dion Affidavit, sworn to January 9, 1969, Exh. C.

Plaintiff orally acknowledged receipt of the check, but did not cash it or return it. In a letter dated August 9, 1968, plaintiff's attorneys informed defendant that the check was unacceptable because the restrictive endorsement...