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Cherokee, Mossimo in Fee Fight

LOS ANGELES — Designer Mossimo Giannulli and brand licensing agent Cherokee Group have separately called for arbitration to settle a dispute over finder’s fee royalties from the Target license. The case is slated to be heard in...

LOS ANGELES — Designer Mossimo Giannulli and brand licensing agent Cherokee Group have separately called for arbitration to settle a dispute over finder’s fee royalties from the Target license. The case is slated to be heard in mid-October.

This story first appeared in the July 10, 2002 issue of WWD.  Subscribe Today.

Neither firm would comment or specify the amount in dispute or the terms of the arbitration.

But Cherokee’s recent quarterly report claims Mossimo Inc. amended the Target license agreement and is therefore looking for a “refund” of the finder’s fees paid to Cherokee “to the extent that they are attributable to design services or the personal services and commitments of Mossimo Giannulli, rather than to the trademark license.”

In the same filing, Cherokee called the claim for refund “meritless” and asserts Giannulli’s “design or personal services are required to be performed under the Target License Agreement.”

Under terms of a three-year licensing deal Cherokee brokered for Mossimo Inc. with Target Stores, Cherokee is owed a 15 percent finder’s fee on all licensing royalties paid to Mossimo Inc. by Target. Pending settlement, Mossimo has withheld its first-quarter payments to Cherokee.

Generally, arbitration is held outside a court and before a person or panel chosen by both parties. Many arbitrations are binding and do not allow either party to appeal the decision.

In 2001, its first year at Target, the Mossimo brand grossed about $700 million in revenues. To date, Cherokee has received $3.19 million in fees from Mossimo, according to Cherokee’s recent quarterly report.

In recent months, Mossimo announced plans to pursue licenses with major global retailers in a manner paralleling Cherokee’s expansion of its own brand. In May, Mossimo licensed its brand to Canadian conglomerate Hudson’s Bay Co. to be carried in its Zellers chain.