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The $6.75 million settlement agreement revealed Wednesday between Maidenform Brands Inc. and Three Times Clothier LLC has given closure to Heather Thomson-Schindler, founder of Yummie Tummie shapewear.
Thomson-Schindler, who serves as Times Three’s president and chief executive officer, called the settlement a “victory” for entrepreneurial designers and innovative fashion apparel companies.
“It’s a win in general for innovation and I’m very proud of it. I think there are a lot of new designers and companies that have new ideas but are scared to death their ideas will be taken away from them,” said Thomson-Schindler, who started her firm on a shoestring budget in 2008.
“This is my new emblazoned passion — I am planning to work with Stephen Kolb at the CFDA and I want to go to Congress to help pass laws to protect designers and their innovative ideas…they have no protection,” she stated.
The litigation involved Maidenform’s multimillion-dollar Fat Free Dressing by Flexees line and Yummie Tummie, a contemporary shapewear line from Times Three that has estimated wholesale sales of $20 million, according to industry sources. The settlement ends patent infringement and invalidity lawsuits that the companies had filed against each other last year. As a result, Maidenform has agreed not to assist any third party that may seek to invalidate or render unenforceable the patents.
Litigation began in March 2010 when Maidenform filed a lawsuit in Manhattan federal court seeking a declaratory judgment that its Flexees Fat Free Dressing Tank did not infringe on a design patent held by Times Three. At the time, Times Three held one design patent for the three-panel Strappy Tank, and it now holds four patents with another pending for the Yummie Tummie franchise.
Thomson-Schindler told WWD that she designed the three-panel control tank top for herself when she couldn’t find a shaper to smooth her post-maternity figure. Times Three countersued in September 2010 in Manhattan federal court, accusing Maidenform of copyright design patent infringement.
Times Three said in court papers that Thomson-Schindler and her business partner, Eric Rothfeld, met with Maurice S. Reznik, ceo and director of Maidenform, on Jan. 29, 2009, to discuss Maidenform’s possible acquisition of Times Three and the Yummie Tummie designs. Reznik indicated that Maidenform had about $40 million available for acquisitions, but Rothfeld said that sum was too low given the popularity of the shapewear and Times Three’s growth potential, according to the suit.
Reznik allegedly expressed continued interest in Times Three, but in July 2009, Times Three executives “became aware of the accused Maidenform garments,” the suit said. After Thomson-Schindler called Reznik, he is said to have offered to arrange another meeting, but it never took place.
Officials at Maidenform could not be reached. But Maidenform said Wednesday in a conference call with analysts that profits in the second quarter fell by 15.3 percent, impacted by a special charge to settle its litigation with Times Three Clothier.
In a discussion with analysts during the conference call, Reznik discussed the settlement.
“The settlement was not an admission of wrongdoing by either party, but reflected the significant legal fees and management time that would have to be devoted to continue to vigorously defend the lawsuit,” said Reznik. “In connection with the lawsuit, we paid Times Three $6.75 million. We are very please to put this litigation behind us and focus all of our efforts on growing our business.”
For the second quarter ended July 2, Maidenform’s income decreased to $11.6 million, or 50 cents a diluted share, from $13.7 million, or 59 cents, last year. The litigation charge of $4.1 million settles patent infringement and invalidity lawsuits that the two litigants filed against each other. Excluding the charge, diluted earnings per share would have been 67 cents for the quarter versus 59 cents a year ago. Sales rose 13.8 percent to $170 million from $149.4 million. The company said shapewear sales rose 33.2 percent. It also said sales at department stores and national chains increased 9.8 percent, while those at the mass market channel gained 29.1 percent.
For the six months ended July 2, profits grew 1.2 percent to $26.1 million, or $1.12 a diluted share, from $25.8 million or $1.10 a year ago. Sales rose 14.1 percent to $333.6 million from $292.3 million.
The Fat Free Dressing shapewear by Flexees, as well as other Maidenform shapewear product, is carried in stores such as Macy’s, Bon-Ton, Kohl’s, J.C. Penney, Belk and Sears. Times Three’s product is sold at Neiman Marcus, Bloomingdale’s, Saks Fifth Avenue, Nordstrom, Dillard’s and Penney’s, among other stores.
“I think this will open more retail doors and more opportunities in the retail environment for Yummie Tummie.…Now Maidenform is no longer producing three-panel tanks in their Fat Free Dressing line. They are only doing two panels. We needed to bring in this settlement with one of the biggest companies and draw a line in the sand. Other companies will see this and say, ‘OK, I’m not playing this game,’” said Thomson-Schindler.