The Franchise Memorandum

In L & L Wings, Inc. v. Marco-Destin, Inc., 2009 WL 4884165 (S.D.N.Y. Dec. 16, 2009), the court granted summary judgment in favor of plaintiff L & L Wings for breach of contract and trademark infringement.  The parties had entered into an agreement by which, among other things, the defendants obtained a license to use the L & L Wings trademark and trade dress on several retail stores selling beachwear and accessories.  At the closing, one of plaintiff’s owners failed to sign the license agreement, although it was signed by his business partner later that day.  When the license expired in 2006, the defendants refused to stop using the plaintiff’s marks. 

The defendants argued that they did not breach the agreement because it was not signed at the closing, and that they had obtained an oral agreement from one of the plaintiff’s owners to use the mark and trade dress in perpetuity.  The court disagreed, finding that the contract was properly executed, and that the merger clause in the agreement precluded any oral agreement.  The court held that the defendants committed trademark infringement in violation of the Lanham Act and violated New York state law by continuing to use the plaintiff’s mark beyond the expiration date.  As a matter of law, a likelihood of confusion among consumers is established when an ex-licensee continues to use a mark after its license has expired.