NEW YORK — Callanen International Inc. filed a lawsuit Wednesday against Fossil Inc. in the U.S. District Court for the Central District of California regarding Fossil’s potential deal with Guess Inc.
The suit alleges that Fossil has violated federal antitrust laws, created unfair state competition and interfered with Callanen’s contractual relationship in regard to the proposed license agreement with Guess.
WWD reported on Monday that Guess was finalizing a long-term agreement with Fossil to produce its watches beginning in January 2007. The agreement would end a 21-year relationship between Guess and Callanen, a Norwalk, Conn.-based watch manufacturer and subsidiary of Timex Corp., Middlebury, Conn.
In the complaint, Callanen said, “Despite its leading position in the fashion watch market, and despite the ongoing contractual relationship between Callanen and Guess, Fossil sought to acquire the exclusive Guess license for itself and thwart Callanen’s and Guess’ efforts to reach agreement on the terms of a new license agreement.”
Frank Sherer, senior vice president and general counsel of Callanen, claimed the deal would “wrap 60 percent of the fashion watch market around Fossil’s wrist.”
The lawsuit is seeking injunctive relief barring Fossil from producing and selling watches under license from Guess and to award Callanen treble damages.
Executives at Guess and Fossil were not available for comment Wednesday.
Guess watches rank among the top-performing brands for Timex, selling between four million and five million pieces annually and pulling in an estimated $160 million at wholesale a year, according to industry sources.
The agreement between Guess and Fossil reportedly includes a target of $1.25 million in annual wholesale volume. Under the deal, Fossil would form a separate company for the Guess business.