In our last edition of The Chippendales Chats, I described a contract that was featured in Welcome to the Chippendales. The agreement – scrawled on a napkin – had Chippendales founder Steve Banerjee granting Nick De Noia the rights to forever use the Chippendales name on a touring troupe. In exchange for these rights, Nick was to pay Steve royalty fees calculated as 50% of the tour's net profits.
After Steve and Nick signed their contract, we see Steve receiving checks in the mail that are presumably royalty payments from Nick. At first he is delighted by them. But not long after that, Steve becomes incensed that he is not enjoying a greater share of the tour's profits. He regrets that he did not demand a higher royalty rate, or perhaps selling the rights at all. He clearly regrets selling the rights "in perpetuity" (forever). In sum, Steve has seller's remorse. All of us can probably relate to that (the murderous impulses, not so much!).
Assuming that Nick was not inclined to renegotiate – which seems a safe assumption given what a great deal the napkin contract was for him – was there any way out for Steve?
As a business disputes lawyer who often helps clients weigh their options under less than perfectly clear contracts, I am struck that the napkin contract did not say whether Steve was granting Nick the "exclusive" right to use the Chippendales name on a tour. To me, it is a fair reading of their contract that Steve retained the right to use the name on his own tour, or to sell the right to others. In other words, the napkin deal was not for an exclusive license. That's the argument for Steve.
I can imagine how this might play out in the story. Steve sells the right to someone else to use the name on another tour, which then competes with Nick's tour, and dilutes Nick's profits. Nick threatens to sue Steve. Steve hires a smart lawyer who persuades Nick (through his lawyer) that he faces greater litigation risk than Steve because the contract does not say "exclusive rights." Nick and Steve then renegotiate a new deal with more favorable terms for Steve. See how smart lawyers can help solve business problems?
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