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Raving Brands Faces Copyright, Employee Litigation
In addition to battling franchisees, Raving Brands takes on a former employee who wants promised stock options and an artist who seeks damages for copyright infringements. A judge recently ruled in favor of one of the plaintiffs. Founder Martin Sprock calls all claims “outrageous.”

Editor’s note: This is the second story in a three-part series about Raving Brands’ and Martin Sprock’s legal troubles. Next week: a Q&A with Sprock.

Raving Brands’ legal troubles go beyond three franchisee lawsuits that allege fraud, misrepresentation, and undisclosed kickbacks. The holding company, which recently sold Moe’s Southwest Grill to FOCUS Brands, faces copyright and former employee disputes.

In January, under the radar, federal courts ruled in favor of artist Janie Atkinson, who claimed Moe’s used her paintings—“Lady John” and “Sir John”—without permission. Both sides are currently arguing damages.

“[Moe’s] reproduced and distributed her work without a license,” says plaintiff’s attorney Lisa Moore. “Everybody goes into Moe’s and sees my client’s work on the bathroom doors, and she hasn’t been paid for it.”

Moe’s markets its “unique, energetic atmosphere and always talks about its music and cool art on the walls…. My client is very upset that there’s been this false association between her and [Moe’s].”

Raving Brands founder Martin Sprock says he paid for the “bathroom pieces” more than a decade ago to use in his Clarence Foster’s restaurant and bar. He believes Atkinson learned of Moe’s copyright-infringement litigation with the Jerry Garcia Estate, which was settled for undisclosed terms in May 2006, and saw an “opportunity.”

According to court records, Atkinson sent a letter to Moe’s officials in 2002 informing them of the infringement. Raving Brands did not investigate the matter and continued reproducing the artwork, records state.

Among other things, Raving Brands argued statute of limitations had passed and that Atkinson granted the company a nonexclusive implied license. But the plaintiff says that the nonexclusive implied license was intended for Clarence Fosters, not Moe’s.

Atkinson now seeks actual damages, which is “the fair-market value of the license,” Moore says. Under the Copyright Act of 1976, Moore says, Atkinson is entitled to direct and indirect profits from the franchisor and franchisees.

It is unknown when damages will be determined. But Moore says her client tried to negotiate terms before filing a complaint.

“The fact that in the face of clear liability they didn’t negotiate a reasonable settlement is unfathomable,” she says. “It speaks to their general attitude of we can out-spin you, out-fight you, and out-last you—not withstanding the fact [they] are clearly culpable.”

Moe’s discontinued the art in question in November 2005, as part of a “change in the interior décor of the Moe’s franchise system,” states the April 2006 Uniform Franchise Offering Circular.

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