In a decision in New York County Supreme Court on Wednesday, Judge Melissa Crane denied Icon DE Holdings LLC (“DE Holdings”) a motion seeking to dismiss in its ongoing court battle against footwear licensee Fashion Footwear LLC.
The dispute arose from the termination and anticipated termination of licensing deals that Fashion Footwear LLC had with Icon DE Holdings. In July 2018, Fashion and Pony first teamed up to manufacture and sell Pony footwear. A year later, Fashion signed a second license with DE Holdings, an affiliate of Pony, to make and sell Danskin footwear. By mid-April 2021, Pony and Fashion signed another license deal that was to run from August 2021 until Dec. 31, 2024. That deal terminated the original license. The renewed Pony license deal required that Fashion must pay Pony a guaranteed minimum royalty, a sales royalty and a minimum advertising royalty.
The Danskin license also required Fashion to pay a minimum gauranteed royalty and minimum guaranteed advertising royalty. It also contained a cross-default clause in the event of any breach or default by Fashion.
Icon Holdings’ termination was purportedly based on a “sale” of more than 50 percent of Iconix’s outstanding, publicly held shares earlier in 2021. But in December 2022, Fashion deemed that the termination clause Iconix relied upon did not apply to the transaction through which Iconix effectuated this so-called “sale.”
In turn, lawyers at Oved and Oved LLP, who are working on behalf of Fashion Footwear, notified Icon that its purported termination of the Pony license was invalid. Icon responded with a termination notice under another provision of the Pony license and a breach notice to Fashion Footwear threatening to end the separate license that Fashion held for the Danskin brand.
Icon first filed a suit and then Fashion filed a counterclaim seeking declaratory judgment and breach of the implied covenant of good faith and fair dealing. Fashion’s declaratory judgment claim sought a declaration that the breach notice was null and void, suggesting the breach of the Pony agreement never occurred. Fashion alleged that the breach notice was designed so that Fashion would give up the two remaining years on the exclusive Pony license.
Icon Holdings was given 20 days to respond. Attorneys at Meister, Selig & Fein, which is representing Icon, did not acknowledge requests for comment. Fashion Footwear is seeking damages in excess of $10 million, according to Terrence Oved of Oved and Oved LLC.