CHICAGO — An Illinois jury has awarded $7 million to Playboy Enterprises in a breach-of-contract suit that alleged two beverage distributors failed to pay royalties for the Playboy Energy Drink they distributed.
Play Beverages LLC and CirTran Beverage Corp. first sued Playboy, claiming that the company deceptively secured new licensing deals in 2012 before their agreements expired.
But Playboy later made counterclaims, and a jury awarded it $1.6 million for breach of contract, along with $5 million for trademark infringement.
Play Beverages and CirTran also were hit with $400,000 in claims for trademark counterfeiting after they were found to be selling the drink after the deal ended.
Playboy and Play Beverages entered into a licensing deal in November 2006 that granted Play Beverages global distribution rights (CirTran contracted with Play Beverages for certain manufacturing and distribution rights in August 2007).
The deal was made for 20 years with a renewal option at the end of every fifth year. Its initial term was to expire at the end of March 2012.
At the time their suit was filed, the beverage distributors were said to have launched the Playboy drink in more than 30 countries and obtained distributors for more than 80 countries.
But despite Play Beverages’ “significant strides” in product development and promotion, the company failed to meet the minimum sales target as spelled out in a license agreement, Playboy alleged.
The beverage distributors alleged in their claims that when new Playboy management took over in 2011, Playboy had no intentions of keeping the deal alive and that it tried to “cut plaintiffs out of their energy drink distribution network.”
Jurors, however, found otherwise and held Play Beverages and CirTran liable for $7 million in damages on counterclaims.
“The jury verdict makes clear that no one other than Playboy has legitimate rights to use the Playboy brand in connection with energy drink products,” Playboy said in a release. “Playboy will strongly enforce its favorable judgment against PlayBev/CirTran to stop [the] companies from engaging in infringing and counterfeiting activities.”