Calvin Klein, Warnaco Settle Licensing Suit

Designer Calvin Klein and Linda Wachner, chief executive of Warnaco Group Inc., reached an eleventh-hour settlement of their trade infringement battle Monday, avoiding a federal trial and preserving a lucrative partnership.

The two fashion heavyweights sealed the deal with a handshake and air kisses in a Manhattan courtroom only minutes before a judge was to begin picking a jury for Calvin Klein Inc.’s lawsuit against Warnaco.

Terms of the settlement were not disclosed, but both Klein and Wachner appeared relieved.

“I’m really happy with the way it turned out,” Klein told reporters. “We’re both happy--that’s all you need to know.”

Calvin Klein sued Warnaco and Wachner last May, claiming they had violated the terms of a lucrative jeans licensing contract. In seeking to terminate the agreement, Klein accused Warnaco of hurting his brand by selling jeans to cut-rate mass market outlets like Costco Warehouse Club without his permission.

In a joint statement, both sides said that they “look forward to expanding jeanswear sales consistent with the image and prestige of Calvin Klein products.”

The suit was filed just weeks after it was reported that Warnaco was interested in buying the privately held Calvin Klein.

Warnaco owns the Calvin Klein underwear business, but the New York-based company is still required to follow certain guidelines.

Shares of Warnaco surged 60% on the news, rising $1.50 to $4 in trading on the New York Stock Exchange.

Representing Klein was David Boies, one of the lawyers representing former Vice President Al Gore in the vote recount in Florida, while the Washington-based Williams & Connolly represented Warnaco.