Blockbuster Canada Wants to Keep ‘Blockbuster’ Name6 Jun, 2011 By: Erik Gruenwedel
Dish seeks to terminate trademark license agreements
The receiver operating bankrupt Blockbuster Canada June 6 filed a motion asking U.S. Bankruptcy Court in New York to allow it to continue using the Blockbuster brand name — despite objections from Blockbuster LLC owner Dish Network Corp.
Shortly before Dish acquired Blockbuster’s assets for $320 million in April, it separated the Canadian rights with the mandate it had 90 days to act on the asset, according to the court filing. On May 25, Dish announced it was not exercising its option to acquire Blockbuster Canada. Instead, it is demanding that the company cease using the Blockbuster name.
Lawyers from Grant Thornton Ltd., the court-appointed receiver/seller of Blockbuster Canada, said the loss of the Blockbuster name would severely restrict its ability to find a buyer for the 400-store chain with 4,000 employees — and pay three U.S. studios about $67 million.
“Outright termination of all of Blockbuster Canada’s rights under the agreements, including Blockbuster Canada’s right to use the Blockbuster trademarks and other intellectual property, would be devastating to Blockbuster Canada’s going concern business and the value of its assets,” wrote the lawyer representing Grant Thornton. “Blockbuster Canada and its creditors will be irreparably harmed if Blockbuster Canada’s right to use the Blockbuster trademarks is extinguished.”
Blockbuster Canada is shuttering more than 120 stores and idling more than 1,200 employees this month, according to reports.
Since starting operations in 1990, Blockbuster Canada has paid Dallas-based Blockbuster Inc. a percentage of its annual revenue through two license agreements, which amounted to 4% following the latest license renewal in 2009.
Last year Blockbuster put up its Canadian operations as collateral to Warner Home Video, 20th Century Fox Home Entertainment and Sony Pictures Home Entertainment to guarantee the three studios’ continue shipments of rental discs. Since March 21, Blockbuster Canada has been in default of its obligations to the studios totaling more than $70 million. That amount is has now been reduced to $67 million.
On May 2, Blockbuster Canada’s board of directors and executive officers resigned their positions, and the company filed for bankruptcy protection.