WWD.com/business-news/legal/jones-wins-round-in-polo-contract-fight-579107/
government-trade
government-trade

Jones Wins Round in Polo Contract Fight

NEW YORK — A New York State appeals court upheld a lower court’s summary judgment in favor of Jones Apparel Group in its breach of contract suit against Polo Ralph Lauren Corp. <BR><BR>Jones said in a statement Thursday that the First...

NEW YORK — A New York State appeals court upheld a lower court’s summary judgment in favor of Jones Apparel Group in its breach of contract suit against Polo Ralph Lauren Corp.

Jones said in a statement Thursday that the First Department of the Appellate Division of the New York State Supreme Court unanimously affirmed the decision and a trial to assess the damages against Polo would follow.

Nancy Murray, senior vice president of public relations and financial communications at Polo, said, “While we respect the view of the Appellate Division, the result does not reflect the clear intention of both parties to the particular contract at issue. Polo is assessing its options regarding an appeal with respect to the issues determined by the appellate court in this round of the litigation.”

Lawyers said the ruling boosts Jones’ case, although Polo has not exhausted its options. Polo could try to overturn the decision in the State Court of Appeals, New York’s highest court, although the company might hold off any appeals until after the trial.

“Typically, the Court of Appeals is not likely to overturn a unanimous affirmation of summary judgment from the lower court,” said Joseph C. Gioconda, a partner with Kirkland & Ellis LLP. Gioconda said a judge would probably wait until the trial on the assessment of damages was finished before certifying an appeal.

Jones’ case has been strengthened because Polo already has been ruled against on the issue of liability, he said.

“Having a judge or a jury focus on the amount of the damages is much better than having the judge or jury have to decide on both questions,” said Gioconda. “Jones doesn’t have to deal with proving the liability. It makes the case much easier.”

Gioconda speculated Polo would try to appeal the entire case once damages have been determined.

The action is the latest step in a legal battle that began in June 2003, when Jones filed the $550 million suit against Polo after the two companies wrestled over the Lauren by Ralph Lauren better sportswear license.

Polo was trying to take back the license for the line, which Jones developed into a $548 million business. Polo maintained the license was tied to the smaller Ralph by Ralph Lauren license, which had not met its targets, and that the two licenses were tied together in such a way that Polo could take them both back.

In a dramatic move, Jones sued Polo — while top management from the two companies were negotiating for the license — and allowed the Lauren license to revert back to Polo. Simultaneously, Jones launched its own better sportswear line, using the team that had produced Lauren, under the Jones New York Signature name. Polo quickly put together design and production teams for its own version of the Lauren line.

The tug-of-war prompted a rush of new lines in the better sportswear arena, which quickly became populated with new and revamped offerings such as H Hilfiger from Tommy Hilfiger Corp., Michael Michael Kors from Michael Kors LLC and Realities from Liz Claiborne Inc.