The Real Deal New York

Donald Trump likely to testify in clothing line licensing dispute

Mogul may take the stand over Signature Collection commissions

January 31, 2013 05:30PM
By Katherine Clarke

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Donald Trump and his signature collection

Donald Trump, the bouffant-haired real estate mogul, is once again trading the boardroom for the courtroom. The developer is likely to testify in court this spring to respond to allegations that he improperly halted payments to New York City-based licensing firm ALM Unlimited, which helped him secure a licensing deal for his Trump-branded clothing line, The Real Deal has learned.

The dispute is set to go before a jury in Manhattan April 8, according to an attorney for the plaintiff.

The litigation centers around a licensing deal made between Trump and apparel giant PVH, formerly known as Phillips-Van Heusen, in 2004. The two parties, brought together by ALM, struck a deal for a line of dress shirts and formal neckwear, from which Trump appears to have profited handsomely. He allegedly pocketed more than $3.2 million in royalties between 2005 and 2007 as a result of the line.

According to an agreement between Trump and ALM dated 2003, Trump consented to pay the firm 22.5 percent of royalties he received from deals the firm secured on his behalf. That agreement was later amended to just 10 percent of the royalties, court documents show. The agreement was allegedly set to remain in place for the duration of the arrangement between Trump and PVH.

ALM alleges that Trump reneged on the agreement in 2008, saying ALM’s role in sourcing the deal with PVH had been minimal. He cut off payments to ALM at that time.

ALM had been paid $300,000 in commissions by Trump between 2004 and 2008. Trump was previously quoted as saying that he had never heard of a licensing deal with such a lengthy term. A New York State Supreme Court judge ordered the case to trial earlier this month, after the parties failed to come to a settlement.

Jay Itkowitz, the attorney representing ALM in the case, defended the nature of the agreement, saying it was not that unusual.

“It’s like a brokerage agreement,” he said. “If you’re a real estate broker and you produce a good tenant for an owner, frequently if the tenant renews, the broker will get another commission.”

Meanwhile, Alan Garten, an attorney for Trump, told The Real Deal that the suit was an “obvious attempt by the plaintiff to capitalize on the tremendous success of the Donald J. Trump Signature Collection.

“Though they claim to be licensing brokers, the plaintiff had no prior experience in the industry, contributed little, if anything, to the transaction and has already received commissions far in excess of what it was entitled,” he said.

Garten confirmed that both Trump and his advisor George Ross (of “Apprentice” fame) would be willing to testify at trial if asked. The mogul is never one to shy away from publicity, Itkowitz said.

“There are certain people who have the attitude that any publicity is good publicity,” he said. “Anything that creates interest about Donald Trump is good for his ‘Apprentice’ franchise.”

It’s not the first time Trump has found himself caught up in licensing disputes. The property magnate was sued by apartment owners at the Trump International Hotel and Tower Fort Lauderdale in Florida in 2011, after they claimed he misrepresented his involvement in several Florida buildings that bear his name but were developed by a third party.

Trump’s signature collection is available at Macy’s, his attorney noted.

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