Calvin Klein Sues Warnaco Over Trademark
Fashion giant Calvin Klein Inc. is suing Warnaco Group Inc., alleging that the maker of its underwear and jeans lines violated the designer’s trademarks and improperly sold merchandise.
The lawsuit, which was filed Tuesday in U.S. District Court in New York, seeks to end all agreements between the two companies, both based in New York. It also seeks to recoup Warnaco’s profit from improper sales and asked for unspecified compensatory damages.
“Warnaco is threatening to erode the Calvin Klein jeans wear and underwear lines through a flood of discounting and other unauthorized sales and practices that are the equivalent of counterfeiting,” Calvin Klein and Barry Schwartz, who together founded Calvin Klein Inc. 32 years ago, said in a prepared statement.
News of the lawsuit and possible termination of its relationship with Calvin Klein sent Warnaco’s shares tumbling $1.63 to $6.69 on the New York Stock Exchange.
Stanley Silverstein, a spokesman for Warnaco, defended the apparel maker, saying that Calvin Klein was regularly informed on how the goods were being sold.
The lawsuit comes just weeks after it was reported that Warnaco was interested in buying the privately held Calvin Klein, which put itself up for sale in October but decided in April to remain independent.
Warnaco owns the Calvin Klein underwear business but is still required to follow certain guidelines. Calvin Klein still designs the underwear line, while Warnaco makes the jeans and men’s accessories under a licensing deal.
Silverstein said Calvin Klein gets about $60 million a year on royalties from the underwear and jeans lines.
In its lawsuit, Calvin Klein alleged that Warnaco infringed and diluted its trademark by selling goods that had not been approved by the design house.
The lawsuit also said Warnaco sold full-price merchandise rather than irregular or discontinued items to off-price warehouse clubs, such as Costco and Wal-Mart Stores’ Sam’s Club. It also sold goods to stores, namely JCPenney, that were not approved for sales.
