## Facts

- Levy Group, Inc. (Levy) entered a December 1, 1997 trademark license agreement with L.C. Licensing, Inc. (LCL) relating to the “Liz Claiborne” and “Claiborne” marks, giving Levy the exclusive right to sell and distribute men’s and women’s outerwear and rainwear bearing the marks in the United States and Puerto Rico.
- Under the agreement, LCL and Liz Claiborne, Inc. (Claiborne) retained the right to use the marks and to grant licenses to others for products other than Levy’s licensed outerwear/rainwear category.
- The parties later amended the agreement, including an April 29, 2002 amendment that extended the relationship and provided renewal rights in successive five-year terms (subject to renegotiation of royalties and minimums). Levy exercised a renewal in 2008.
- Levy developed a distribution network focused on “better-zone” retailers (higher quality/higher price points) and alleged that its expected profits depended on keeping the marks associated with that retail tier.
- Levy alleged that, for years, LCL and Claiborne required Levy to use a different Claiborne-owned mark, “Crazy Horse,” when selling merchandise to J.C. Penney (JCP) because JCP was not a better-zone retailer.
- Claiborne later entered an agreement granting JCP an exclusive worldwide license to use the “Liz Claiborne” and “Claiborne” marks for products other than outerwear.
- Levy sued LCL and Claiborne for (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) promissory estoppel, and (4) tortious interference with contract (against Claiborne), alleging that JCP’s use of the marks on non-outerwear goods would damage the marks’ image with better-zone retailers and reduce Levy’s profits.
- Defendants moved to dismiss the complaint under CPLR 3211(a)(1) and (a)(7).

## Issues

1. Did Levy state a breach of contract claim where the license granted Levy exclusivity only for outerwear/rainwear and reserved to defendants the right to license the marks for other products, including a later non-outerwear license to JCP?
2. Could Levy state a claim for breach of the covenant of good faith and fair dealing based on alleged harm to the marks’ “better-zone” image when the contract did not restrict defendants from licensing the marks for other product categories?
3. Was promissory estoppel available where a written license agreement governed the parties’ relationship and the subject matter of the alleged promises?
4. Could a tortious interference with contract claim proceed absent a pleaded breach of the underlying license agreement?

## Decision

- The court granted defendants’ CPLR 3211 motion and dismissed the complaint in its entirety.
- The breach of contract claim was dismissed because the license agreement limited Levy’s exclusivity to outerwear/rainwear and expressly allowed defendants to use and license the marks for non-outerwear products; the JCP license, as alleged, did not violate Levy’s exclusive category.
- The good faith and fair dealing claim was dismissed as duplicative of the contract claim and because it sought to impose limits inconsistent with the contract’s express reservation of defendants’ licensing rights.
- The promissory estoppel claim was dismissed because a valid, enforceable written agreement governed the same subject matter.
- The tortious interference with contract claim was dismissed because it depended on an underlying breach, and the complaint did not state a breach of the license agreement.

## Legal Principles

- Courts enforce trademark license agreements according to their text; exclusivity is limited to the product category stated in the agreement.
- Where a license reserves to the licensor the right to license a mark for goods outside the licensee’s exclusive category, granting such a license to a third party is not a breach absent an express restriction.
- The implied covenant of good faith and fair dealing cannot be used to impose new limits that conflict with rights expressly granted by the contract, and it cannot be pleaded as a substitute for an unsuccessful contract claim.
- Promissory estoppel is generally not available where a valid written contract governs the same subject matter as the alleged promise.
- Tortious interference with contract requires an actual breach of the contract; without a breach, the interference claim fails.

## Conclusion

The court held that Levy’s expectations about preserving a better-zone brand image could not override the license agreement’s allocation of rights: Levy’s exclusivity was confined to outerwear/rainwear, and defendants remained free to license the marks for other products, so all contract, implied covenant, estoppel, and interference claims were dismissed.


Levy Group, Inc. v. L.C. Licensing, Inc., 2010 NY Slip Op 33800, 2010 N.Y. Misc. LEXIS 6816 (2010)