Calvin Klein and Warnaco Settle Dispute As Federal Trial Was Getting Under Way
By Teri Agins
Staff Reporter of The Wall Street Journal
NEW YORK -- Jonathan Schiller, a lawyer for Calvin Klein Inc., said Monday it has reached a settlement with Warnaco Group Inc. in their apparel-licensing dispute.
Terms of the deal were confidential, but the companies' business partnership will continue.
The announcement came as the companies were beginning in federal court here. The deal also settled a separate action in New York State Supreme Court filed by Calvin Klein.
Right before the settlement was announced, Mr. Klein shook hands with Warnaco Chief Executive and Chairwoman Linda Wachner and kissed her on the cheek.
The settlement follows months of bitter exchanges in which both sides have hurled weighty allegations at one another ranging from breach of contract to defamation.
The dispute between the business partners -- Warnaco makes jeans and underwear for Calvin Klein under a long-term licensing agreement -- began last spring, when Calvin Klein alleged in a lawsuit that Warnaco essentially had driven its good name into the ground through overproduction and cheating on its licensing contract.
Warnaco fired back with its own counterclaims, accusing the designer of bad-faith dealing and trade libel, and sought hundreds of millions of dollars in damages. The company claims Mr. Klein tried to smear Warnaco in remarks he made on "Larry King Live" about apparel made by Warnaco, which is based in New York.
In the trial, Warnaco was expected to argue that it did nothing wrong and that Calvin Klein knew what it was doing every step of the way, cashing more than $85 million in royalty checks between 1998 and 2000.
The outcome of the trial was key to Warnaco's survival. The manufacturer's sales and profit plummeted last year, amid a difficult retailing environment and the negative publicity from the case.
Warnaco, whose apparel brands include Chaps sportswear, Speedo swimwear and Warner's lingerie, would have been hard pressed to rebound if it loses the CK jeans license, which accounts for $600 million of its $2.3 billion in annual sales. |
