Arbitration Over Cross-Border Lingerie Franchise Results in California Supreme Court Decision Confirming Broad Arbitrator Powers

Los Angeles (June 23, 2008) LAWFUEL – Trial lawyers with global law firm Squire, Sanders & Dempsey L.L.P. represented Celine Gueyffier in an appeal before the California Supreme Court that resulted in a landmark decision bolstering the role of private arbitration as an independent dispute resolution mechanism.

“This decision will become part of the holy trinity of California Supreme Court cases establishing broad arbitration powers,” said Squire Sanders partner Douglas J. Rovens, who argued the case before the state Supreme Court and handled the underlying arbitration. The court’s decision was based on two previous groundbreaking arbitration rulings in 1992 and 1994.

The decision ended a three-year legal battle over a failed franchise agreement between French citizen Celine Gueyffier and UK-based Ann Summers Ltd. Gueyffier planned to enter the US market with a California-based franchise chain selling Ann Summers Ltd. goods – sex toys and lingerie. When the store plans fizzled, both sides claimed breach of contract. The matter went to arbitration and came before the California Supreme Court on the issue of arbitrators’ powers.

“The arbitrator concluded our client had not received training and guidance promised by the franchisor, which prompted our client to end the relationship,” Rovens said. “The arbitrator also concluded that because these breaches of contract could not be remedied, our client was not bound by a contractual agreement to give the franchisor written notice and 60 days to solve the problem before Ann Summers could be held in breach.”

The arbitrator’s award was confirmed by Los Angeles Superior Court Judge George H. Wu, who now sits on the federal bench. The Court of Appeals Division Five reversed that decision in a published opinion, concluding the arbitrator had overstepped his role by changing a material term in the contract. The California Supreme Court, however, concluded unanimously that the arbitrator’s decision was well within his powers.

“The court concluded an arbitrator does not exceed his or her powers by applying equitable defenses to excuse a party from performing a material condition – in this case, the condition that before the franchisor can be found in breach of the franchise agreement by the arbitrator, the franchisee must provide notice and opportunity to cure the breach. The court specifically held that the arbitrator was empowered to interpret and apply agreements made by the parties to the facts he found to exist, particularly the power to decide when particular clauses apply,” Rovens said.

“This is an issue of broad import because a finding that an arbitrator has exceeded his or her powers is a universal ground for vacating or refusing to enforce an arbitration award under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. sec. 201 et seq., the Federal
Arbitration Act, 9 U.S.C. sec. 1 et seq., state arbitration laws and arbitration laws of many countries,” Rovens said. “The decision provides useful guidance to practitioners in terms of both how to draft an arbitration clause to restrict the scope of an arbitrator’s powers and how to resist after-the-fact claims that an arbitrator has exceeded his or her powers.”

Founded in 1890, Squire, Sanders & Dempsey L.L.P. has lawyers in 32 offices in 15 countries around the world. With one of the strongest integrated global platforms and a longstanding one-firm philosophy, Squire Sanders provides sophisticated seamless legal counsel worldwide. Offices in the Americas are located in Cincinnati, Cleveland, Columbus, Houston, Los Angeles, Miami, New York, Palo Alto, Phoenix, San Francisco, Tallahassee, Tampa, Tysons Corner, Washington DC, West Palm Beach, Caracas, Rio de Janeiro, Santo Domingo and São Paulo. In Europe, offices are in Bratislava, Brussels, Budapest, Frankfurt, Kyiv, London, Moscow, Prague and Warsaw. In Asia, offices are in Beijing, Hong Kong, Shanghai and Tokyo. Associated offices include Bucharest, Buenos Aires, Dublin and Santiago.

CHICAGO (LAWFUEL) – Brinks Hofer Gilson & Lione, one of the largest intellectual property law firms in the United States, is pleased to announce that Jeffery A. Handelman, a shareholder and chair of Brinks’ Trademark Group, and Christopher A. Harkins, an attorney in the firm’s Chicago office, are recipients of 2008 Burton Awards, which are given in association with the U.S. Library of Congress and Law Library of Congress. The black-tie ceremony was held at the Library of Congress in Washington, D.C. and featured keynote speaker Associate Supreme Court Justice Stephen Breyer.

Mr. Handelman and Brinks tied for first place in the category of Best Law Firm Compendium for his Guide to TTAB Practice, Volumes 1 and 2, published by Aspen Publishers, a division of the Wolters Kluwer Law & Business Group. Guide to TTAB Practice is a one-of-a-kind, nuts-and-bolts resource written by an expert practitioner that takes the reader step-by-step through the entire process of practicing before the TTAB. This award was sponsored by the Association of Legal Administrators with LexisNexis as a participating contributor.

Mr. Harkins won the 2008 National Award for Excellence in Legal Writing for his article, “Fending Off Paper Patents and Patent Trolls: A Novel ‘Cold Fusion’ Defense Because Changing Times Demand It,” which was published in the Albany Law Journal of Science & Technology (2007). This is the second consecutive year that Mr. Harkins has been recognized for his exemplary contributions to legal writing. He won the 2007 National Award for Excellence in Legal Writing for his article entitled, “Tattoos and Copyright Infringement: Celebrities, Marketers, and Businesses Beware of the Ink,” which was published in the Lewis and Clark Law Review (2006.)

In 1999, a unique national awards program was established to reward legal writing. Founded by lawyer and author, William C. Burton, the Burton Awards program and the Burton Foundation, a non-profit, cultural and academic organization, annually acknowledges concise and effective legal writing by partners in law firms and law students who use plain, clear and succinct language to inform clients or the public about legal issues or topics. Entries must be in written form, rather than disseminated over the Internet, and published during 2007. More information about the Burton Awards can be
found at www.burtonawards.com.

Mr. Handelman is the chair of the Trademark Group at Brinks Hofer Gilson & Lione. He has specialized in intellectual property law since joining Brinks as an associate in 1984.
His expertise includes trademark law, unfair competition, trade dress, dilution, false advertising, copyright law and licensing matters. Mr. Handelman litigates before the U.S. Court of Appeals and U.S. District Courts around the country and practices extensively before the Trademark Trial and Appeal Board (TTAB). Mr. Handelman is a prolific writer and frequently invited speaker on intellectual property topics. He received his law degree from Georgetown University Law Center, Washington, D.C.

Mr. Harkins focuses on litigation and patent prosecution. He has litigated in the areas of patent, trade secrets and copyrights and has prosecuted patents in the mechanical arts and medical devices. Mr. Harkins has been cited by the U.S. Congress in support of the then-pending “Patent Reform Act of 2007” seeking to enact the most sweeping changes to the patent statute in 55 years. In addition to his IP practice, his experience has included drafting the firm’s pro bono policy and serving on the firm’s award-winning pro bono program, as well as representing many pro bono clients. Mr. Harkins received his law degree from the University of Illinois College of Law.

Founded in 1917, Brinks Hofer Gilson & Lione is based in Chicago with four additional offices across the country serving the intellectual property needs of clients from around the world. The firm is one of the largest IP law firms in the country, with more than 170 attorneys, scientific advisors and patent agents specializing in intellectual property litigation and all aspects of patent, trademark, copyright, trade secret, unfair competition, intellectual asset management, and technology and licensing agreements. Brinks routinely handles assignments in fields as diverse as electrical, chemical, mechanical, biotechnology, pharmaceutical, nanotechnology, Internet and computer technology, as well as in trademarks and brand names for a wide variety of products and services. For more information, visit www.usebrinks.com.