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Over $120 Million Awarded in Palm Restaurant Licensing Dispute

News
11.14.2018

A New York Supreme Court judge has awarded over $120 million to plaintiffs in a precedent-setting trademark licensing suit involving royalties to be paid for the famous Palm restaurant intellectual property. Plaintiffs were represented by Fred Newman of Hoguet Newman Regal & Kenney, LLP and Josh Rievman of Cohen Tauber Spievack & Wagner P.C., assisted by HNRK intellectual property counsel Marc Melzer, associate Julian Brod, and Cohen Tauber associate Raquel Alvarenga.

“The Palm is iconic, and the court found that the correct and proper way to license valuable intellectual property is to use the percentage of sales methodology. This is the first time a trial court has fully resolved that important question. We are delighted to bring a long-awaited measure of justice to clients who were denied their rightful legacy for decades,” said Fred Newman, a founding partner at HNRK and co-lead trial counsel for plaintiffs Gary Ganzi, Claire Breen, and the estate of Chuck Cook.

“We prevailed using a modern and sophisticated approach to proving damages in commercial litigation,” said Josh Rievman, co-lead trial counsel for the plaintiffs. “The court awarded damages for the defendants’ breach of fiduciary duty and usurpation of corporate opportunities, including $71,304,995 in past royalties and $1,742,000 in lost rent. With interest and attorneys’ fees, the total award is at least $120,000,000.”

The origins of the dispute go back decades in the colorful history of the Palm restaurant, the original Manhattan location of which was opened in 1926 by a pair of Italian immigrants. Two of their grandsons, defendants Walter Ganzi Jr. and Bruce Bozzi, hold an 80 percent stake in the company that owns the Palm name, with their cousins, the plaintiffs, owning the remaining 20 percent. The two defendants opened over 20 additional Palm restaurants using wholly-owned companies and licensed the rights to use the Palm name, logo, and other intellectual property to themselves at a flat rate per restaurant regardless of sales.

Plaintiffs challenged the flat fee royalty rate, set over 40 years ago, for the Palm restaurant intellectual property—its trademarks, world-famous name, look and feel, and related attributes—as substantially below market and as calculated in an unusual and inappropriate manner for famous trademarks. The trial court agreed and required a royalty based upon five percent of sales.

Justice Andrea Masley presided in the Commercial Division of the New York Supreme Court. The case is Ganzi, Gary C. et al. v. Ganzi Jr., Walter et al. (No. 653074-2012).

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