GUESS WINS OVER $6M IN DAMAGES
Byline: Kristi Ellis
LOS ANGELES — The American Arbitration Association has awarded Guess Inc. damages in excess of $6 million in a claim against Pour Le Bebe Inc., the former licensee of Baby Guess and the Guess Home Collection, according to Daniel Petrocelli, an attorney representing Guess.
Pour Le Bebe, owned by Michel Benasra, held the Baby Guess license for infants’ and children’s apparel for 15 years and the Home Collection license for five years, Petrocelli said.
According to Petrocelli, Pour Le Bebe was in breach of its two licensing contracts after it stopped making royalty and advertising payments and started selling to unauthorized off-price retailers and discounters.
Guess terminated the Baby Guess license with Pour Le Bebe in November 1998. The Home Collection license was terminated in May 1999, according to Petrocelli.
“In the complaint we state that Pour Le Bebe did not cooperate in winding down the licensing agreement, which severely hurt Guess,” Petrocelli said.
“Pour Le Bebe cancelled orders with department stores after the termination notice was sent and did massive liquidations to off-price retailers and discounters,” Petrocelli added.
Pour Le Bebe filed several counterclaims against Guess, alleging, among other things, that Guess did not have the right to terminate its licensing agreements.
Philip Heller, an attorney representing Benasra and Pour Le Bebe, conceded that Guess won pre-termination damages, stressing that the unpaid royalties were not the issue of the dispute. In its counterclaims, which the arbitrators ruled against, Pour Le Bebe contended that Guess was in discussions for a possible buyout of the company and signed a letter of intent in February 1999.
Pour Le Bebe claimed that the royalty payments would be included in the purchase price of the company, Heller said. But the talks fell through in May 1999, and Guess terminated its licensing agreements with Pour Le Bebe, Heller said.