U.S. District Court Judge Todd Campbell has issued a temporary restraining order on the Nashville company that was tasked with reviving the Duck Head clothing brand.
Duck Head USA-International, owner of the mallard head trademark, sued Nashville Apparel Co. after the business became insolvent earlier this year.
“Specifically, the Court finds that Plaintiffs are likely to succeed on their claims that the NAC Sublicense has been terminated, that the sell-off period has been terminated, and that Defendants are not entitled to market or sell products bearing the 'DUCK HEAD' trademark,” the TRO order written by Campbell said.
Under the order, NAC must halt unauthorized sales of any remaining Duck Head merchandise until after a preliminary injunction hearing on Sept. 19. Duck Head has to post a $300,000 bond with the court.
If NAC follows through on any Duck Head sales between now and the next hearing, they have to put Duck Head's six percent royalty into an escrow account pending the furtherance of the court proceedings.
NAC filed a defense against the injunction on Wednesday morning claiming they are not in default on royalty payments. NAC claims they paid a minimum royalty that was enacted when sales didn't reach a certain level.
NAC accuses Duck Head of shutting down the website which interfered with their opportunity to process pending orders of $250,000 to $300,000 in clothing. The filing claims that NAC offered Duck Head a six percent royalty up front for $1 million in clothes if they were allowed to sell the inventory. Duck Head declined.