The Lawsuit and Allegations
The family of Calvin Klein filed a lawsuit on May 30, 2000, against Warnaco Group Inc. for 18 counts, which encompassed intentional misrepresentation, trademark dilution, and trademark infringement. Warnaco denied the primary allegations after a few weeks through a countersuit arguing that it acted within the scope of the licensing agreement of the two companies.
Implications for the Fashion Industry
The case study highlights such expected marketplace issues as licensing practices, distribution practices as well as fashion retailing. Nonetheless, an individual going through it should remember "licensing was a staple in the fashion business" (pg. 7) during the millennium. Many firms resorted to licensing to enable them to extend their brands in a bid to earn a steady revenue by 2000. Such brands included Liz Claiborne, Nine West, and Ralph Lauren which earned a lot of revenue from licensing brands in the fashion industry. Therefore, licensing was not only a prominent but also a successful trend within this industry in the millennium. Such licensing groups as Warnaco Group emerged out of this trending success.
The Growth of Warnaco and the Calvin Klein Underwear Line
The history of Warnaco as illustrated on pages 15 to 18 of the case study is very impressive and enables one to understand the kind of growth it brought to the family of Calvin Klein. For instance, one of its successes involved Calvin Klein underwear line which it managed to increase its sales to approximately 350 million dollars from 55 million dollars within a time-frame of just five years. The CKI president, Gabriella Forte, elaborates on page 16 that the Wachner managed to accomplish such an objective by boosting products' flow in stores, expanding markets as well as ensuring that the infrastructure was in line with the business' expansion. Actually, this represents Calvin Klein Inc. executive members' expectation of Warnaco Group from their agreement.
Key Licensing Topics Addressed in the Case Study
The three most dominant aspects of licensing topics touched by the Calvin Klein vs. Warnaco case study include the rights of both the licensee and the licensor, the rights to a trademark, and the agreements and understandings of a contract. According to the Calvin Klein Jeanswear Licensing Agreement excerpts (exhibit 1) signed by both firms as stated on page 21, Warnaco agreed to not only increase the number of articles sold but also be consistent with the past practices of Calvin Klein Inc. It is also necessary to note that the licensing agreement is not with Calvin Klein Inc. as the owner but with the Calvin Klein Trademark Trust who is the beneficial owner to all the interest, titles, and rights to or in the licensed mark. A detailed analysis of the excerpt of the Jeanswear licensing agreement further reveals that "Warnaco controls any such act or thing which may in any way adversely affect any rights of the Trust." According to the concept of licensing, the licensors' risk is the loss of control over their property. Despite the good fight from both parties, it is necessary to note that this licensing agreement was based on business rather than emotion and is strategized by understanding, product, and contract. While Warnaco is utilizing facts to fight this case, Calvin Klein approaches it with emotion. The product and selling strategies employed by Warnaco had nothing to do with the eroding of the image of Calvin Klein. The strategies employed were legally agreed upon in the form of a contract. That is why the two firms credited such strategies to success when sales were high. Therefore, I find Warnaco Group Inc. not guilty of the said charges.
Reference
Fournier, S. " Boer, J. (2002). Calvin Klein, Inc. v. Warnaco Group, Inc. Harvard Business School Case 503-011.
