Kent wins dispute

BANGOR – Bankrupt Kent Inc. can keep sharing with another company the trademark licensing agreement it has with Healthtex Apparel Corp., according to a federal bankruptcy judge’s ruling last Friday.

Healthtex was seeking a preliminary injunction against Kent, which has operations in Fort Kent, stating that the children’s wear producer did not receive all of the necessary approvals to extend the licensing agreement to a third-party manufacturer.

U.S. Bankruptcy Judge Louis H. Kornreich was asked to sort out a deal struck last summer between financially desperate Kent Inc. and the third party, Nazareth International Co. of New York City, to produce sleepwear and playwear for infants and toddlers.

During an evidentiary hearing March 18, Michael Gans, president of Kent Inc., testified that under the partnership with Nazareth, Nazareth would provide the “financial muscle” to produce the children’s wear in China. Nazareth would select the manufacturer, buy the raw materials used to make the products, ship the merchandise, and bill and collect payments from Kent’s customers.

He said Kent would design the merchandise, market and sell it to wholesale customers and maintain customer relationships.

Healthtex, however, argued that Kent Inc. was not authorized to extend the licensing agreement to Nazareth because Nazareth was acting more like a manufacturer of children’s wear than Kent.

Kornreich, in his Friday decision on the preliminary injunction, said Healthtex failed to prove that Nazareth actually was selling the products.

“I conclude that Kent has the contract with each customer,” Kornreich wrote. “Nazareth’s functions with regard to sales are clerical.”

Healthtex also argued that in addition to the alleged breach of contract, Kent and Nazareth allegedly were infringing on its trademarks. For purposes of the preliminary injunction, Kornreich said Healthtex failed to show irreparable injury.

“Saying there has been a trademark infringement doesn’t make it so,” Kornreich wrote. “If, after final hearing, Healthtex has demonstrated that Nazareth is an unauthorized licensee, injunctive relief may be necessary to avoid irreparable injury from unlawful trademark infringement. We are not there yet. Healthtex has failed to convince me of the likelihood of its success.”

Gans, in a telephone interview Friday from his office in New York City, said Kent is considering filing a countersuit against Healthtex for allegedly interfering in the relationships it has with its wholesale customers.

A final hearing on Healthtex’s lawsuit may be held within two months. “It could go to trial, yes,” Gans said. “But that’s several months away.”

In the meantime, Gans said Kent is continuing discussions with investors. In early March, the company received funding from its primary lender to last through the beginning of May.