Enesco sues to uphold exclusivity rights

Enesco Group, Inc. filed a breach of contract lawsuit against Department 56 Inc., Sunshine Productions Inc., Kevin Knowles and Jim Shore Designs Inc.

Enesco's complaint alleges Jim Shore Designs is breaching provisions related to a worldwide exclusivity license agreement, filed Oct. 5, 2004, with the Securities and Exchange Commission. Regarding Department 56, Enesco's complaint alleges a violation of Section 43(a) of the Lanham Act, specifically unauthorized modifications of product identification codes under federal trademark law.

"At this point we are aware of the press release," said Julie Wingert, senior counsel, Department 56. "We are aware that they say they've filed a suit; we've not been served with any lawsuit. We vigorously deny the claims and will defend ourselves."

In the lawsuit, Enesco also alleges Sunshine Productions interfered with Enesco's contract with Jim Shore Designs. Finally, Enesco alleges Sunshine Productions and Kevin Knowles engaged in a civil conspiracy and induced an employee to breach her duty of loyalty to Enesco.

Enesco plans to rigorously pursue adherence to its current license agreement with Jim Shore Designs. Enesco does not seek to terminate its license agreement with Shore, who is one of the company's strongest designers.

The company does seek financial and fair compensation in the lawsuit, which was filed July 29 in U.S. District Court, Northern District of Illinois, Eastern Division.

Jim Shore was traveling out of the country and could not be reached for comment.

Also at July's end, Enesco promoted Corporate Controller Anthony Testolin to chief accounting officer. Testolin will serve as the giftware manufacturer's principal financial officer until a permanent chief financial officer can be found to replace David Harbert. Enesco continues to search for a permanent CFO.

Enesco management continues to lead its operational restructuring plans with the support of Keystone Consulting Group. Enesco management also will increase Keystone's role in planning and negotiating the company's financing with its current and replacement credit facilities.