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Rusty Back in the Courtroom

Even as La Jolla Group begins to create its own version of Rusty apparel in North America, the surf brand continues to find itself embroiled in legal dispute.

NEW YORK — Even as La Jolla Group begins to create its own version of Rusty apparel in North America, the surf brand continues to find itself embroiled in legal dispute.

In the latest twist of an ongoing battle for rights to the Rusty apparel license, C&C Partners, through the L.A.-based counsel of Kozberg & Bodell LLP and Gradstein & Luskin, has sued the San Diego–based R. & Everything Else (Rdot), owners of the Rusty brand.

A trial date will be set on Oct. 15 to address C&C’s complaint, filed at the Superior Court of California in Orange County, alleging that Rdot unlawfully terminated the company’s license of Rusty surfwear. C&C is also suing Geoff Backshall, Phillip Clifford and Rod Hart, the individual owners of Rdot. In total, C&C is seeking more than $10 million in damages.

“The breach of contract is clear,” said Gregory Bodell of Kozberg & Bodell. “Rdot and its owners have not properly cancelled the license and they are exploiting the Rusty brand.”

The suit comes less than two months after La Jolla Group, which was not named in the suit, was granted a long-term license from Rdot to create the North American apparel line.

But according to Bodell, Rdot never properly cancelled C&C’s license, which was signed with the brand’s founder Rusty Preisendorfer in 1989, and had a term of 40 years. Rdot, said Bodell, cancelled the license based on a term not specified by the original agreement.

The license controversy began shortly after Preisendorfer sold his majority stake of Rusty to longtime Australian licensee Rusty Australia/Vegas Entertainment (now called Rdot) in August 2006. C&C and Rdot have been in and out of court various times since then to clarify Rusty’s license ownership. As for the latest suit, said Bodell, C&C intends to regain the rights to the license, or reap the profits they would have earned during the remaining 20 years of the agreement.

Chris Setzler, Rusty North America’s president, said in an e-mail, “We understand the legalities going on between C&C and Rdot. At the end of the day, we feel confident that LJG will continue to provide superior product, customer service and brand enrichment, regardless of how the legalities play out.”

Backshall, the Australia-based CEO of Rdot, could not be reached for comment.

Rusty’s U.S. volume has been estimated at around $15 million, a figure La Jolla executives have said they plan to double in 2009, and bump to $40 million or $50 million within the next five years.