Business litigation often concerns disputed licensing agreements

In Georgia and elsewhere, disputes between businesses are a regular way of life. The conflicts have a wide range and involve many different factual scenarios. Sometimes, the bitterness of business litigation can create bad perceptions about each other between the battling entities. On the other hand, some business conflicts are so commonplace that the companies may suppress their annoyance and go on to do even more business together in the future.

That is one lesson learned from the recent settlement of a court action between Reebok and CrossFit about the payment of royalties pursuant to a licensing agreement. The parties’ had a 10-year partnership or joint venture agreement in which Cross Fit gave Reebok a license to sell fitness apparel and footwear products with the CrossFit trademark. As is generally provided in such agreements, Reebok agreed to pay royalties on its net sales to CrossFit, which is also a standard type of promise.

CrossFit sued Reebok this year, claiming that Reebok suddenly in 2013 unilaterally changed the formula for paying royalties, to the detriment of CrossFit. The plaintiff also complained that Reebok did not live up to its promise to spend $51.75 million on marketing the cross-branded products. Reebok denied the accusations and expressed surprise that CrossFit would jeopardize the relationship. According to the statements of the companies, the two partners will go forward and continue to perform under their partnership agreement.

The specific details of the settlement are unknown and were confidential. CrossFit’s claim in its complaint was for $4.8 million. Reports indicate that while the amounts are unknown, there was a payment by Reebok to CrossFit for disputed royalty claims. The general pattern of the lawsuit follows similar business litigation disputes in the Georgia state and federal courts over contested royalty payments.