Motion Picture Assn. of America head Jack Valenti says film studios may follow their music counterparts in pursuing individual file-sharers through the courts if online film piracy continues unabated.

Breaking News

Ex-Exec Sues Label For Slander

By Phyllis Stark

NASHVILLE--The former president of SEA Records in Nashville is suing the label and several of its top executives, claiming her reputation was slandered.

In the suit, filed May 12, Felicia "Lisa" Wysocky says label executives engaged in a pattern of "persistent, intentional constant savaging...for purely malicious reasons of the reputation Wysocky had built up in Nashville over the previous 19 years as an executive in the music industry."

Listed as defendants in the action, filed in the circuit court for Davidson County, Tenn., are SEA Records, parent company Sterling Entertainment Associates and several related businesses. Also named are SEA/Sterling CEO Tina Corry, SEA consultant Bob Saporiti and SEA/Sterling attorney Alan Phillips.

Wysocky was hired to run SEA last October and resigned from the company in December. The label recently relaunched under new management (Billboard, May 8). She claims in the suit that CEO Tina Corry maligned her by telling numerous people both inside and outside the company that Wysocky had embezzled several hundred thousand dollars.

Wysocky calls those allegations "false and slanderous." She says she left SEA because of Corry’s "her questionable business practices and her poor treatment of employees, vendors and potential business partners, her explosive temper and foul mouth, and her rants and raves."

Since her exit, Wysocky says she has been "shunned at business functions" and has been unable to find other work. Wysocky had filed a previous suit against Corry and her company in the Davidson County chancery court March 17. That suit charged SEA with breach of contract and failure to pay salary and health benefits.

On April 16, Sterling filed a counterclaim against Wysocky, also citing breach of contract as well as fraud and theft. The new filing leaves Wysocky with two suits over the same subject matter pending in two different courts.

The attorney who represented Wysocky in the March 17 filing, Jim Harris of Gordon Martin Jones & Harris in Nashville, is no longer her counsel. Harris tells ELW he has agreed to "a substitution of counsel" and he expects Wysocky’s new attorneys to seek to have the two cases "joined." Wysocky is now represented by Nashville attorney Philip Lyon and Los Angeles attorney Neville Johnson.

In a prepared statement, a SEA spokesperson said, "We anticipate full vindication of all the superfluous charges alleged against Ms. Corry personally and her privately-owned companies."

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Ex-Fox Workers Targeted In Piracy Case

By Paul Bond

LOS ANGELES (Hollywood Reporter)--Federal authorities are bringing criminal charges against five men and one woman formerly employed by Fox Cable Networks after an investigation indicated that the group uploaded movies, games and software onto a Fox computer network and illegally distributed the content.

Agents from the U.S. Secret Service and Federal Bureau of Investigation say the six former Fox workers--some of whom were full-time employees, others consultants--operated a "warez group."

Those who participate in such groups not only allow the distribution of copyrighted material illegally but compete worldwide in an effort to establish their reputations as providers of quality, albeit pirated, goods.

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Hyperion Records Embroiled In Copyright Row

By Roger Pearson

LONDON--A British composer, who claims four of his arrangements were released on CD without his approval and without his being recognized as the author, has launched a High Court battle for up to £50,000 ($88,165).

The court action was initiated by Beckenham, England-based baroque music expert Lionel Sawkins, a composer and editor known for his adaptations of works by French composer Michel-Richard De Lalande.

Sawkins says British classical label Hyperion Records infringed his copyright by releasing a CD containing four De Lalande arrangements he recorded in October 2001.

The case centers on his scores for arrangements of De Lalande's works "Te Deum Laudamus," "Sacris Solemniis," "Venite, Exultemus" and "La Grande Piéce Royale."

Sawkins claims that in 2001, he discussed with Ex Cathedra Ltd, a choir and orchestra, plans for them to hold concerts in Birmingham and London using his scores, with a recording to be released on CD by Hyperion.

However, he claims that Hyperion never agreed to his contract terms relating to his ownership of the copyright in the works and restrictions upon their use, and that the agreement was never signed.

Nevertheless, he says that in October 2001, a recording of the four pieces was made by Hyperion and released o the CD "Music for the Sun King" on sale in the U.K. and throughout the world.

He says no permission was granted for the publishers to reproduce the works, and that Hyperion has infringed his copyright in them. He says that the CD does not identify him as the author.

His attorney, Andrew Norris, told the judge, Mr. Justice Patten: "Hyperion has acted in flagrant disregard of Dr Sawkins' rights."

Sawkins claims his four scores were not reproduced from existing published scores, but were created through extensive musicological research of a variety of manuscript and printed sources, earlier 18th Century printed editions and other performances of De Lalande's musical works.

He claims to have added orchestral parts himself, to have adapted and modernized the notation, set the underlay to the revised vocal parts and restored corrupted parts of the music.

Hyperion disputes Sawkins' copyright claim, arguing that although he may have expended a considerable amount of effort in arranging the score, it was not the sort of effort that could be protected by copyright as it lacked the critical requirement of originality. Hyperion says Sawkins has not significantly altered the works in a way which would give rise to a new copyright.

Hyperion's counsel, Jacqueline Reid, in written submissions before the court, said that Sawkins' argument that he was entitled to copyright as he had pieced the scores together from a range of sources was "fallacious."

She said: "Take, as an example, a jigsaw puzzle of the Mona Lisa. Assume that the original copy of the Mona Lisa cannot be found, and that a jigsaw puzzle depicting the work does exist but has not been completed. Is the person who puts together the puzzle entitled to copyright in the artistic work, the Mona Lisa, which is reproduced in the completed puzzle? The answer, it is submitted, is clearly no."

Sawkins is seeking £15,000-£50,000 in damages, plus interest, an injunction barring further sale of the CD, and an order that all existing copies be handed over to him or destroyed.

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Film Studios Mull Piracy Lawsuits

By Peter Kiefer

CANNES (Hollywood Reporter)--Motion Picture Assn. of America head Jack Valenti says film studios may follow their music counterparts in pursuing individual file-sharers through the courts if online film piracy continues unabated.

"We are not ruling out anything, as far as America is concerned," said Valenti, speaking in Cannes following an international piracy roundtable, which included several prominent film executives.

"If all of our efforts over the next several months do not show an ameliorization of this, we are not ruling out lawsuits. We have no plans to do that but we are not going to rule it out as an option," he added.

When asked whether legal action could spawn a commensurate backlash amongst file sharers, Valenti responded: "We are not coming down on students, we are coming down on students that are stealing property."

Representatives from France, China, Russia, India, Spain along with distribution executives, talent and local producers presented a unified front in the fight against piracy at a half-hour press conference following a closed door meeting at the Palais.

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SAG, Aussie Union Eye Trade Pact

By Jesse Hiestand

LOS ANGELES (Hollywood Repporter)--The Screen Actors Guild of America and its Australian counterpart are stepping up their opposition to a proposed U.S-Australia Free Trade Agreement because it may contain language that would allow producers to take rights and royalties from actors.

SAG officials say they lobbied the Bush administration, Motion Picture Assn. of America and Recording Industry Assn. of America to amend the law but were unsuccessful in removing the "work for hire" clause that would allegedly empower producers to keep all royalties generated by levies on recording devices and blank media rather than share them with authors and performers, as is done in other parts of the world.

"Among its flaws, the agreement in its current form undermines both Australian culture and the rights of U.S. actors to fair and full compensation for their performances," SAG senior adviser John McGuire says.

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Washington Report

ClearPlay Hearing In D.C. This Week

By Bill Holland

WASHINGTON--The House Subcommittee on Courts, the Internet and Intellectual Property has scheduled a hearing Thursday (May 20) to examine the so-called moral rights issues in a legal dispute between the motion picture industry and creators of ClearPlay, a technology that filters sexual, violent or profane scenes in films that parents might not want their kids to see.

No panelists have yet been announced.

ClearPlay technology is used on a $79 RCA model DVD player and is also available as a stand-alone model. The product is the subject of a copyright -infringement lawsuit pending in Colorado federal court.

The suit was filed in 2002 by the Directors Guild of America, including members Martin Scorsese and Steven Spielberg. At that time, ClearPlay was only available as a computer program.

Rep. F. James Sensenbrenner Jr., R-Wis., House Judiciary Committee chairman, has warned ClearPlay and the film industry to work out their legal wranglings or face government legislative intervention.

The DGA is citing the moral rights provision of the U.S. Copyright Act in its case against ClearPlay. The group contends that since the technology alters a copyrighted work, the result is a derivative work produced without the permission of the owner.

ClearPlay disagrees, saying its product's features are no different than the skip, fast-forward or mute functions on a normal DVD player.

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DMCA Adjustment Fuels Capitol Hill Debate

By Bill Holland

WASHINGTON--There's a lot of buzz on Capitol Hill about a pending bill that seeks to enlarge the "fair use" sections of the Digital Millennium Copyright Act (DMCA).

The main provision, The Digital Media Consumers' Rights Act of 2003, H.R. 107, would allow consumers to use circumvention software to defeat copy restriction encryption on DVDs and advanced audio to make copies as long as they were copying for non-infringing purposes. In other words, it would change current law that bans such software to banning the conduct of a user.

"H.R. 107," says one industry lobbyist "has more stumbling blocks to overcome than a salmon swimming upstream. But it'll be interesting to watch the journey."

First, the bill must be first passed by two House subcommittees and two full committees--Judiciary and Commerce--before it can go to the House floor for a vote. Should it pass, it must then go to the Senate.

Currently, there is no Senate bill counterpart.

The bill has gotten attention for two reasons. First, it pits the entertainment companies, which oppose the bill, against the Internet and electronic manufacturer industries, and the scholar-research-library communities,which support it.

Second, its authors, Rep. Dick Boucher, D-Va. and John Doolittle, R-Cal., were able to get the support of Rep. Joe Barton, R-Texas, the powerful chairman of the House Commerce Committee. He is one of the 15 co-sponsors of the bill.

To the credit of its authors, the measure contains copyright fair use provisions that the Judiciary Committee must debate, as well as sections calling for better labeling of digital entertainment products, which comes under the jurisdiction of the Commerce Committee.

That the Boucher-Doolittle measure had languished in the Judiciary Committee for nearly 18 months without being scheduled for a hearing only makes the buzz louder.

For one thing, say sources, members of that committee are reluctant to revisit the DMCA, thus admitting that their own initial forging of the 1998 DMCA now is an impediment to researchers and consumers.

Opponents say the DMCA's fair use sections are unfair and draconian because those who want to use software to circumvent copy prevention systems of product they have bought and plan to copy for non-infringing purposes cannot do so legally under present law.

The record and movie industries have been successful in convincing lawmakers on Judiciary that there is now no technology able to discern if a citizen using software to disable copying would be doing so for non-commercial reasons.

And then there's the enforcement dilemma: Granting an exemption to allow honest citizens to disable DVD and advanced audio products, they say, would be tantamount to leaving the back door open in a bad neighborhood.

All of these arguments were debated that the May 12 hearing before the Commerce Committee's Subcommittee on Telecommunications and the Internet.

Support for the measure was led by copyright professor Lawrence Lessig, who had convincing arguments that the DMCA has restricted fair use of digital material. He had less convincing answers about how the content companies can protect themselves from commercial pirates and a general citizenry that already seems to feel there is no onus for downloading and uploading music files for free.

The Recording Industry Assn. of America and the movie lobby has made it clear to Judiciary Committee members they oppose the bill. Now they are doing the same with members who sit on Commerce, say sources.

Cary Sherman, president of the RIAA, says the industry has to educate members of the Commerce Committee. "(The issue) isn't just about commercial piracy, but about ordinary consumers who've become worldwide distributors of our content and who have a misconceived and incorrect interpretation of "fair use" to justify their behavior."

Three big questions are making tongues wag: will the Commerce Committee subcommittee hearing will now spur the Judiciary Committee to give the bill an airing in its subcommittee? Or will it still sit on the bill until a possible vote by the panel forces them to take it up?

Finally, would House passage make the Senate aware that a pro-consumer "fair use" bill might be just the ticket in an election year?

Stay tuned.

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International Section

French E-Commerce Bill Opens Door For P2P Suits

By James Martin

PARIS--France will soon have in place the legislation necessary to enable the music industry to sue cyber-criminals.

The French Senate on May 13 approved the nation's new e-commerce bill, which provides a legislative framework for the digital economy.

The measure, which has been voted in similar terms by both houses of the French Parliament, now gets reviewed by France's constitutional court before being enacted.

Known in France as LEN (Law on Digital Economy), the bill incorporates into French law the European Union's June 2000 E-commerce Directive. It will provide new legislative tools to combat cyber-criminality and better protect e-commerce users.

ISPs will be required to immediately remove any illicit content upon any complaint by a third party.

Music trade body SNEP said last month that it was preparing a series of lawsuits against music file off-loaders, but was awaiting the adoption of the LEN.

The text does not go as far as the industry had hoped. However, SNEP legal director Frédéric Goldsmith, says the law "will bring about a clarification of ISPs' responsibilities. It will be easier to obtain their cooperation with the law behind us."

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Blue's Lee Ryan Cleared On Assault Charges

By Emmanuel Legrand

LONDON--A district judge at Horseferry Road Magistrates' Court has cleared Lee Ryan, of Innocent/Virgin-signed British pop band Blue, of assaulting photographers.

Ryan was accused of assaulting freelance photographer David Abiaw and Conor Nolan, who works for photo agency Big Pictures, last December as they attempted to photograph him leaving a London nightclub with a woman.

Judge Caroline Tubbs dismissed the assault charges, ruling that Ryan acted in self-defense. But he was convicted on two counts of criminal damage for smashing the photographers' cameras. Ryan was ordered to pay £300 ($532) to Abiaw and £200 ($354) to Big Pictures for damaging their camera equipment. But the judge dismissed an application from the prosecution for Ryan to pay legal costs.

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Cannes Protest Turns Violent

By Charles Masters

CANNES (Hollywood Reporter)--The ongoing protest at the Cannes film festival by part-time workers erupted into violence Saturday.

A group of 50 protesters occupied the Star cinema, blocking market screenings, and were forcibly ejected by plainclothes police, witnesses say. A contingent of at least 50 CRS riot police were soon on the scene and sealed off the Rue d'Antibes.

"The occupation was peaceful. Plainclothes officers went in to clear us out, they were punching and using night sticks. They charged in like brutes. Several (market accredited) professionals were knocked over," says one protester.

"It was peaceful," confirms Laurent Danielou of France's Rezo Films, whose screening of "Last Chance Saloon" cancelled by the action.

Several arrests were made, police say. Four police vehicles made a loop along a short stretch of the Croisette past fest-goers in full black-tie attire on their way to the gala screening of "Shrek 2," as they carted off those arrested.

The strikes are an attempt to pressure the French government to reconsider its planned reform of unemployment benefits for self-employed show business workers.

Current conditions require 100,000 actors and technicians to work 507 hours each year to qualify for 12 months of unemployment pay. The new plan, approved in August 2003 and scheduled to take effect in 2005, shortens the period to 507 hours worked over 10 months to receive eight months pay.

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Dream Makers & Deal Breakers

Spotlight: Vivendi Universal, NARAS, Koch Records

- Vivendi Universal names Sandrine Dufour deputy chief financial officer. Dufour, who is based in New York, previously headed the internal audit and special projects unit of VU. Vincent Vallejo, currently deputy head of internal audit, replaces Dufour in her most recent post.

- The National Academy of Recording Arts and Sciences in Los Angeles names Lizzy Moore regional director of the West. She was director of corporate relations and special projects at P.S. Arts.

- Koch Records in New York promotes John Franck to VP of marketing and Jeff Chenault to VP of creative. Franck previously was senior director of marketing. Chenault most recently was senior director of creative.

- Blender magazine in New York appoints Eric Simon associate publisher. He was director of business development at Blender parent company Dennis Publishing.

- Vibe in New York names Jeff Mazzacano senior corporate accounts manager. He was VP of marketing and advertising for Oneworld magazine.

- New Line Home Entertainment appoints Kevin Kasha senior VP of acquisitions and programming. He was executive VP at Miramax Home Entertainment.

- EMI Latin USA in Miami appoints David Alvarado senior director of marketing and A&R, pop music. He previously was senior product manager at Universal Music Latino.

- Motion Picture Assn. in Singapore ups Michael C. Ellis to senior VP/regional director, Asia-Pacific. He was VP/regional director, Asia-Pacific.

- Gospel artist Duawne Starling has signed a deal with Gerald Wright, president of The Wright Group, an Arlington, Texas-based artist management firm. Starling previously toured with Kirk Franklin and has worked as a backup vocalist for Michael
McDonald, Donnie McClurkin, CeCe Winans and Nicole C. Mullen. Starling recently stepped out with a solo project, "Inside Out," on the G.I. label, which is distributed by Christian Records.

- Sony Music Nashville promotes Tracy Baskette-Fleaner to senior art director. She previously was art director.

- Infinity Broadcasting in Phoenix names Todd Wallace director of operations. He previously was an independent consultant.

- BMI in Nashville elevates Glenda Hart to senior director of special projects. She most recently was director of special projects.

- Clear Channel Radio names Susan Karis regional VP for its Arizona stations in Tucson and Yuma. She adds that title to her title of VP/market manager for Phoenix.

- Jazz KTWV in Los Angeles appoints Dan Weiner VP/GM. He was station manager of sports XTRA-AM San Diego.

Contributors: Carla Hay (New York) and Deborah Evans-Price (Nashville)

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Why All The Noise About Ringtones?

By Steven Masur

As anyone who's heard a cell phone ring in a crowded room knows, there is a nascent industry growing around the delivery of content to mobile phones.

Though still in the early stages of development, there are numerous types of content and information currently available, including news and stock quotes, entertainment and games. New technologies even allow for streaming content and video conferencing.

So far, ringtones are by far the most successful such service, with reported sales of $2.5 billion-$3.5 billion dollars worldwide in 2003. U.S. sales last year accounted for only 3% of this figure, or about $100 million dollars, but are expected to increase exponentially this year, driven by greater market penetration of handsets that support polyphonic ringtones.

Early ringtones were monophonic, meaning that they only played one note at a time--like playing a song using a touch-tone phone. Also, they had to be downloaded from the Internet and separately installed onto the mobile phone from the user's computer. Now, anyone who buys a new phone can download a polyphonic ringtone directly to the phone through on-phone menu selection.

Polyphonic ringtones make use of MIDI technology to deliver a wider range of tones simultaneously. If tweaked correctly, instrumental pieces can sound almost like the real thing. However, the newest technology allows for the delivery of samples of actual master recordings directly to the user's mobile phone. This new generation of ringtones are variously called "mastertones," "trutones," or "ring tunes."

Ringtones represent a wide variety of previously untapped revenue sources, but there is a thicket of legal issues and hidden costs. First, a seller of ringtones must purchase a mechanical license through the Harry Fox Agency or directly through the publishers. Arguably, a ringtone provider would also have to purchase public performance licenses through performing rights societies, such as ASCAP, BMI and SESAC. This would allow the ringtone to be heard in public each time the phone rings. Finally, a ringtone provider typically pays a percentage of each sale to the carrier on whose service the ringtone provider is listed.

Mastertones, or trutones, represent a whole new opportunity for record companies, who typically own the masters to the artists' sound recordings. In order to sell mastertones, the ringtone provider must pay a royalty to the owner of the master to the sound recording of the song being sampled. The first such deals have already been announced by such ringtone service providers as Zingy and Faith West. As of yet, no industry standard rate has evolved.

Finally, new business models are developing which demonstrate the vibrancy of this new market for mobile music--and possibly threaten the industry standard of doing business. In 2003, Xingtone began selling software that allows users to convert music that they already own into ringtones without paying a fee to any ringtone provider, copyright holder, or wireless carrier. So far, no major publisher, nor the RIAA, ASCAP, or BMI has taken an official public stance on services such as Xingtone. While many artists and labels are skeptical, some see a revenue generating opportunity.

As exciting as the ringtone business may seem, it is just the tip of the iceberg in terms of content or applications that can be delivered to mobile phones. Many new companies have begun to successfully offer games, local entertainment and food listings (Vindigo), news updates (Diggit), music audio recognition (MusiKube), fan clubs (Wicked Wireless), social interaction services, video conferencing, streaming television, and even pornographic images.

As the technology of mobile devices improves and consumer adoption of such devices become more widespread, the potential for generating revenue in the wireless industry will increase for content providers and copyright holders alike, as well as the carriers.

The challenge will be to capture users attention and create innovative and compelling licensing models that offer a good value proposition while still generating enough revenue to sufficiently compensate copyright holders.

Steven Masur is a partner with MasurLaw, a boutique entertainment, intellectual property and business law firm in New York. His colleagues Peter Moran, Andy McCormick, Cheryl Wickham and Mark Anderson contributed to this piece.

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Case Analyses

Lawyer Has Vivendi Uni In His Sights

By Charles Masters

PARIS (Hollywood Reporter)-- Mention David and Goliath to French lawyer Frederik-Karel Canoy and he shrugs. "I'm supposed to be David?" he asks, disingenuously.

The comparison is not unreasonable. Canoy is a modest lawyer representing a small association of militant shareholders, APPAC, which is taking on behemoths of the French stock exchange. One of their primary targets is Vivendi Universal, whose management misdeeds lost stockholders up to $48.4 billion, Canoy asserts.

Canoy was at university with APPAC president Didier Cornardeau, so when the latter formed the shareholders' association in March 2002, he asked Canoy to front the legal team. "We play hardball. We work with the criminal law. We think (some directors) are thieves, so they should go to jail," Canoy says.

His 10-by-15-foot office in the Paris suburb of St. Mande has none of the trappings of a star lawyer. Indeed, Canoy's daily bread is a humdrum mix of divorce cases and representing police officers for the interior ministry. "For me, this is the case of a lifetime," he says.

Canoy's legal moves prompted an inquiry into suspected wrongdoing at Vivendi Universal by France's financial police. Among alleged irregularities under investigation is the company's large-scale acquisition of its own shares in fall 2001, which reportedly took place in the banned 15-day period before the publication of financial results and supposedly broke regulations on the quantity purchased and time of transaction. So far, two Vivendi staff and a bank executive are facing charges in connection with the probe. Vivendi Universal, which is a plaintiff in the investigation, declines to comment on the case.

Canoy also alleges irregularities in the terms of severance arrangements for ex-chairman Jean-Marie Messier, and claims that Vivendi Universal falsified its accounts when the company was first quoted on Wall Street--allegations almost impossible to substantiate without the sort of access police investigators have.

But his central claim concerns the cataclysmic fall in Vivendi Uni's share price in 2002 that accompanied the ousting of Messier and the discovery of the company's colossal debt problem.

"The share price went down because the company gave out false information," Canoy states. "I'd like to see the (creditor) banks get together to compensate shareholders. The criminal charges are another thing."

Canoy contends that Vivendi Universal will be the "French Enron." He also says he was offered an unspecified sum to drop his case but does not want to say publicly from whom the offer came. Vivendi Universal says it is suing him for defamation after he suggested in a French paper that it came from them.

So what drives him to take on French corporate might? "In France, it's a club. Those who run companies are incompetent. They're just in it for enrichment. The whole economic system is going to collapse, just like in Russia," predicts Canoy, who says he stands for capitalism with moral values. "You don't take the company plane to go to Morocco with your mistress!" he thunders, alluding to alleged behavior of one of the directors in his firing line.

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New Filings: Oscar De La Renta, Halston, Tommy Hilfiger

Case: Halston LLC v. Madison Maidens Licensing Corp.
Issue: Plaintiff wants to audit defendant's sale of products bearing plaintiff's trademark
Cite: N.Y. Supreme Court; Case No. 601398
Filing attorney: David Langlois of Piper Rudnick

Case: Oscar De La Renta Ltd. v. Sadimara Knitwear; Apparel Group Intl; Alan Mordo; Colette Mordo
Issue: Breach of licensing agreement
Cite: N.Y. Supreme Court; Case No. 601394
Filing attorney: Richard Tashjian of Tashjian & Padian

Case: Tommy Hilfiger Licensing, et al. v. Anchor Group; J. Benjamin McGrew
Issue: Breach of contract
Cite: U.S. District Court for the Southern District of N.Y.; Case No. CV-3630
Filing attorney: Ira Sacks of Gursky & Partners

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