WASHINGTON (CN) – Everything seems to be for sale these days, including the Great Seal of the United States. A California company claims the U.S. Secret Service Uniformed Division Benefit Fund (c/o the White House Gift Shop) sold it rights to the Presidential Seal and the Great Seal of the United States – but left out the part about the White House Counsel having to approve it.
Capstone S.G., based in Sherman Oaks, sued the Secret Service Uniformed Division Benefit Fund c/o the White House Gift Shop, the Licensing Group Ltd. of Los Angeles, and its attorney Peter Eichler of Scottsdale, Ariz., alleging fraud, breach of contract, breach of warranty and consumer law violations.
Capstone claims the defendants sold it the rights to print the Great Seal of the United States and the seals of the President, the Vice President, the White House and Air Force One on watches and other products for 4 years.
“Capstone’s business model was first based on commercializing the Presidential Seal on licensed products,” the company says in its Superior Court complaint. It claims that the Secret Service and the Licensing Group assured it that approval from any other entity was not necessary.
“Mr. Danny Simon, President of defendant TLG repeatedly told Capstone and others that the Fund had the right to grant Capstone the exclusive license to use the seals the Fund was licensing, and that the licenses would be valid and enforceable,” the complaint states.
So, Capstone says, it began developing products, seeking outside investors who projected that Capstone would be worth $19.6 million after 5 years.
“Mr. Simon and defendant Eichler also assured Capstone and its potential investors and strategic partners that the Fund would extend Capstone’s current licensing agreements for an additional 11 years (for a total of 15 years) in exchange for payment of an additional advance/guaranty of $100,000,” the complaint states. (Parentheses in complaint.)
But, much to its surprise, Capstone says, 2 years in the deal, it got a letter from The Licensing Group telling it to stop using the seals.
“In this letter, Mr. Simon informed Capstone that, contrary to defendants’ prior representations, including in the Licensing Agreements, Capstone could no longer use these marks by order of the White House Counsel,” Capstone says. “After apologizing for ‘any problems’ caused by this abrupt reversal, the letter claims that the Fund and [Tom] Muldoon had ‘no control over the matter, as control of this material resides with the offices of the Counsel to the President.'”
Tom Muldoon, not named as a defendant, is president of the Secret Service Benefit Fund, according to the complaint.
The complaint adds: “Because Capstone’s entire business at the time was devoted to commercializing the marks described in the Licensing Agreements on licensed products, defendants’ cease and desist letter destroyed Capstone’s business.”
Capstone seeks punitive damages. It is represented by Laurel Malson with Crowell Moring.